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.,

V.

ANGIE MORIANA,

Petitioner,

Respondent.

─────  ─────

On Writ Of Certiorari

to the California Court of Appeal

─────  ─────

BRIEF OF AMICI CURIAE

WASHINGTON LEGAL FOUNDATION

AND ATLANTIC LEGAL FOUNDATION

IN SUPPORT OF PETITIONER

─────  ─────

HORVITZ & LEVY LLP

PEDER K. BATALDEN

FELIX SHAFIR

Counsel of Record

JOHN F. QUERIO

3601 WEST OLIVE AVENUE, 8TH FLOOR

BURBANK, CALIFORNIA 91505

(818) 995-0800

fshafir@horvitzlevy.com

WASHINGTON LEGAL

FOUNDATION

CORY L. ANDREWS

JOHN M. MASSLON II

2009 MASS. AVE. NW

WASHINGTON, DC 20036

(202) 588-0302

candrews@wlf.org

ATLANTIC LEGAL

FOUNDATION

LAWRENCE S. EBNER

1701 PENN. AVE. NW,

SUITE 200

WASHINGTON, D.C. 20006

(202) 729-6337

lawrence.ebner@atlanticlegal.org

Counsel for Amici Curiae

Washington Legal Foundation & Atlantic Legal Foundation

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ..................................... iii

INTEREST OF AMICI CURIAE ................................1

SUMMARY OF ARGUMENT.....................................3

ARGUMENT ...............................................................7

I.

THE FAA PREEMPTS THE ISKANIAN

RULE’S PROHIBITION AGAINST

PAGA

REPRESENTATIVE-ACTION

WAIVERS. ........................................................7

II.

CALIFORNIA

COURTS

CANNOT

EVADE THE FAA’S MANDATE BY

LABELING PAGA ACTIONS AS QUI

TAM ACTIONS BECAUSE PAGA

CLAIMS ARE NOT GOVERNMENTAL

CLAIMS. .........................................................10

III.

THE FAA APPLIES TO PAGA CLAIMS

EVEN

IF

THEY

ARE

GOVERNMENTAL CLAIMS. ........................17

A.

Governmental claims are subject

to the FAA under Epic. ........................17

B.

Even absent Epic, the FAA covers

qui tam claims because they

belong to the relator, who can

bind

the

government

to

arbitration of those claims. .................20

ii

C.

Regardless, the FAA still applies

because the named plaintiffs

control the prosecution of the

claims. ..................................................23

IV.

THE FAA’S SAVING CLAUSE DOES

NOT PREVENT THE FAA FROM

PREEMPTING ISKANIAN’S PAGA

RULE. .............................................................25

V.

RESPONDENT’S CONCERNS ABOUT

THE WAIVER OF REPRESENTATIVE

PAGA CLAIMS CANNOT RENDER

THE FAA INAPPLICABLE. ..........................30

CONCLUSION ..........................................................33

iii

TABLE OF AUTHORITIES

Page(s)

Cases

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

570 U.S. 228 (2013)........................................19, 32

Amalgamated Transit Union, Loc. 1756

v. Superior Ct.,

209 P.3d 937 (Cal. 2009) ......................................30

Arias v. Superior Ct.,

209 P.3d 923 (Cal. 2009) ......................................10

AT&T Mobility LLC v. Concepcion,

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

Brooks v. AmeriHome Mortg. Co.,

260 Cal. Rptr. 3d 428

(Ct. App. 2020) .................................................5, 27

Correia v. NB Baker Elec., Inc.,

244 Cal. Rptr. 3d 177

(Ct. App. 2019) ......................................... 11, 22, 23

Davis v. O’Melveny & Myers,

485 F.3d 1066 (9th Cir. 2007)........................16, 17

Deck v. Miami Jacobs Bus. Coll. Co.,

No. 12-cv-63, 2013 WL 394875

(S.D. Ohio Jan. 31, 2013) .....................................21

DIRECTV, Inc. v. Imburgia,

577 U.S. 47 (2015)..............................................2, 7

iv

Driscoll v. Granite Rock Co.,

No. 1-08-CV-103426, 2011 WL 10366147

(Cal. Super. Ct. Sept. 20, 2011) ...........................28

Epic Sys. Corp. v. Lewis,

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

Equal Employment Opportunity

Commission v. Waffle House, Inc.,

534 U.S. 279 (2002).............................. 6, 23, 24, 25

Espinoza v. Hepta Run, Inc.,

No. B306292, 2022 WL 167770

(Cal. Ct. App. Jan. 19, 2022) ...............................28

Ferguson v. Corinthian Coll., Inc.,

733 F.3d 928 (9th Cir. 2013)................................16

Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991)............................................7, 17

Goodwin v. Elkins & Co.,

730 F.2d 99 (3d Cir. 1984) .....................................3

Gregg v. Uber Techs., Inc.,

No. B302925, 2021 WL 1561297

(Cal. Ct. App. Apr. 21, 2021),

petition for cert. filed, 2021 WL 4353008

(U.S. Sept. 21, 2021) (No. 21-453) .......................31

Gurley v. Hunt,

287 F.3d 728 (8th Cir. 2002)................................18

Hobbs v. Verizon Cal.,

No. B228482, 2011 WL 2937148

(Cal. Ct. App. July 19, 2011) ...............................13

v

Huff v. Securitas Sec. Servs.,

233 Cal. Rptr. 3d 502 (Ct. App. 2018) .................10

Iskanian v. CLS Transportation

Los Angeles, LLC,

327 P.3d 129 (Cal. 2014) .............................. passim

Kim v. Reins Int’l Cal., Inc.,

459 P.3d 1123 (Cal. 2020) ................................9, 22

Kindred Nursing Ctrs. Ltd. P’ship

v. Clark,

137 S. Ct. 1421 (2017)..........................................26

Lamps Plus, Inc. v. Varela,

139 S. Ct. 1407 (2019)....................................7, 8, 9

Linder v. Thrifty Oil Co.,

2 P.3d 27 (Cal. 2000) ............................................10

Magadia v. Wal-Mart Assocs., Inc.,

999 F.3d 668 (9th Cir. 2021)........ 12, 13, 14, 15, 23

Marmet Health Care Ctr., Inc. v. Brown,

565 U.S. 530 (2012)........................................12, 26

Mendoza v. Nordstrom, Inc.,

393 P.3d 375 (Cal. 2017) ........................................4

Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc.,

473 U.S. 614 (1985)........................................30, 32

Murphy Oil USA, Inc.,

361 N.L.R.B. 774 (2014) ................................18, 19

vi

Murphy Oil USA, Inc. v. N.L.R.B.,

808 F.3d 1013 (5th Cir. 2015).................. 17, 18, 19

NAACP v. Button,

371 U.S. 415 (1963)..............................................11

Nanavati v. Adecco USA, Inc.,

99 F. Supp. 3d 1072 (N.D. Cal. 2015)..................15

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

568 U.S. 17 (2012)................................................12

People v. Uber Techs., Inc.,

270 Cal. Rptr. 3d 290 (Ct. App. 2020) .................31

Perry v. Thomas,

482 U.S. 483 (1987)......................................7, 8, 12

Porter v. Nabors Drilling USA, L.P.,

854 F.3d 1057 (9th Cir. 2017)..............................15

Preston v. Ferrer,

552 U.S. 346 (2008)..........................................7, 24

Rivas v. Coverall N. Am., Inc.,

842 F. App’x 55 (9th Cir. 2021),

petition for cert. filed, 2021 WL

3772913 (U.S. Aug. 20, 2021)

(No. 21-268) ..................................................5, 9, 27

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

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

Shearson/Am. Express, Inc. v. McMahon,

482 U.S. 220 (1987)................................................7

vii

Sprint Commc’ns Co. v. APCC Servs., Inc.,

554 U.S. 269 (2008)........................................20, 21

State ex rel. Bartlett v. Miller,

197 Cal. Rptr. 3d 673 (Ct. App. 2016) .................13

State v. Pac. Bell Tel. Co.,

48 Cal. Rptr. 3d 427 (Ct. App. 2006) ...................13

Teimouri v. Macy’s, Inc.,

No. D060696, 2013 WL 2006815

(Cal. Ct. App. May 14, 2013) ...............................29

Turrieta v. Lyft, Inc.,

284 Cal. Rptr. 3d 767 (Ct. App. 2021),

petition for review granted,

2022 WL 57711 (Cal. Jan. 5, 2022)

(No. S271721) ........................................... 10, 27, 28

United States ex rel. Eisenstein v.

City of New York,

556 U.S. 929 (2009)............................ 12, 20, 21, 22

United States ex rel. Hicks v. Evercare Hosp.,

No. 12-cv-887, 2015 WL 4498744

(S.D. Ohio July 23, 2015) .....................................21

United States ex rel. Ritchie v. Lockheed

Martin Corp.,

558 F.3d 1161 (10th Cir. 2009)......................20, 21

United States v. Bankers Ins. Co.,

245 F.3d 315 (4th Cir. 2001)................................21

Valdez v. Terminix Int’l Co. Ltd.,

681 F. App’x 592 (9th Cir. 2017) .........................21

viii

Vt. Agency of Nat. Res. v. United States

ex rel. Stevens,

529 U.S. 765 (2000)............................ 12, 14, 15, 20

Wesson v. Staples the Off. Superstore, LLC,

283 Cal. Rptr. 3d 846

(Ct. App. 2021) ......................................... 28, 29, 31

Williams v. Superior Ct.,

398 P.3d 69 (Cal. 2017) ................................4, 9, 29

Wisconsin v. J.C. Penney Co.,

311 U.S. 435 (1940)........................................11, 12

ZB, N.A. v. Superior Ct.,

448 P.3d 239 (Cal. 2019) ........................................9

Constitutions

United States Constitution

art. VI, cl. 2 ..........................................................12

Rules

Fed. R. Civ. P. 23 .......................................................10

ix

Miscellaneous

About ALF, Atlantic Legal Found.,

https://atlanticlegal.org/about/ ..............................1

Brief of Amici Curiae Atlantic Legal

Foundation & Washington Legal

Foundation in Support of Petitioner,

Coverall N. Am., Inc. v. Rivas,

No. 21-268 (U.S. Nov. 17, 2021) ............................2

Complaint, Garcia-Brower v. Uber

Techs., Inc., No. RG20070283

(Cal. Super. Ct. Aug. 5, 2020),

2020 WL 4729151 ...............................................31

Mathew Andrews, Whistling in Silence:

The Implications of Arbitration on

Qui Tam Claims Under the

False Claims Act,

15 Pepp. Disp. Resol. L.J. 203 (2015) ..................21

Victor E. Schwartz & Christopher E. Appel,

Setting the Record Straight About the

Benefits of Pre-Dispute Arbitration,

WLF Legal Backgrounder (June 7, 2019),

https://www.wlf.org/wpcontent/uploads/2019/06/06072019SchwartzAppel_LB.pdf ................................2

1

INTEREST OF AMICI CURIAE 1

Washington Legal Foundation (WLF) is a nonprofit, public-interest law firm and policy center with

supporters nationwide. WLF promotes free enterprise, individual rights, limited government, and the

rule of law.

Established in 1977, Atlantic Legal Foundation

(ALF) is a national, nonprofit, nonpartisan, public interest law firm whose mission is to advance the rule

of law and civil justice by advocating for individual

liberty, free enterprise, property rights, limited and

efficient government, sound science in judicial and

regulatory proceedings, and school choice. With the

benefit of guidance from the distinguished legal scholars, corporate legal officers, private practitioners,

business executives, and prominent scientists who

serve on its Board of Directors and Advisory Council,

ALF pursues its mission by participating as amicus

curiae in carefully selected appeals before the Supreme Court, federal courts of appeals, and state supreme courts. See About ALF, Atlantic Legal Found.,

https://atlanticlegal.org/about/ (last visited Feb. 1,

2022).

WLF and ALF regularly appear as amici curiae

in this Court to support the rights of parties to enter

into binding arbitration agreements as an expedient,

inexpensive, and efficient alternative to civil

No party’s counsel authored this amicus brief in whole or in

part. No one, other than WLF, ALF, or their counsel contributed

money to prepare or submit this brief. All parties have filed blanket consents to the filing of amicus briefs.

1

2

litigation. See, e.g., Brief of Amici Curiae Atlantic Legal Foundation & Washington Legal Foundation in

Support of Petitioner, Coverall N. Am., Inc. v. Rivas,

No. 21-268 (U.S. Nov. 17, 2021), Epic Sys. Corp. v.

Lewis, 138 S. Ct. 1612 (2018); DIRECTV, Inc. v. Imburgia, 577 U.S. 47 (2015). Both amici have addressed

in particular the hostility of California courts to the

Federal Arbitration Act (FAA) and the enforceability

of arbitration agreements. And WLF’s publishing arm

often produces articles and other educational materials on arbitration. See, e.g., Victor E. Schwartz &

Christopher E. Appel, Setting the Record Straight

About the Benefits of Pre-Dispute Arbitration, WLF

Legal

Backgrounder

(June

7,

2019),

https://www.wlf.org/wp-content/uploads/2019/06/06072019SchwartzAppel_LB.pdf.

The FAA requires courts to enforce arbitration

agreements strictly according to their terms. This

case is the latest in a long line of decisions from California refusing to follow the FAA’s directive requiring

arbitration agreements to be enforced as written. The

California Court of Appeal declined to enforce a representative-action waiver in the parties’ arbitration

agreement based on Iskanian v. CLS Transportation

Los Angeles, LLC, 327 P.3d 129 (Cal. 2014). Iskanian

held that representative claims under California’s

Private Attorneys General Act (PAGA) are exempt

from the FAA because they are qui tam actions in

which plaintiffs pursue public (not individual) claims

for relief. And since that court held the FAA did not

apply to PAGA claims, it refused to enforce a PAGA

representative-action waiver in a company’s arbitration agreement. In other words, by repackaging a

3

class or collective action as a representative action under PAGA, California courts have evaded this Court’s

precedent in Epic and AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), which require the enforcement of an arbitration agreement’s representative-action waiver. The California Court of Appeal’s refusal

to apply the FAA flouts the Supremacy Clause and is

preempted.

The FAA “establish[ed] a uniform federal law

over contracts which fall within its scope.” Goodwin v.

Elkins & Co., 730 F.2d 99, 108 (3d Cir. 1984). WLF

and ALF seek uniform application of the FAA nationwide to ensure that arbitration achieves its basic purpose: resolving disputes efficiently, predictably, individually, and cost-effectively. The decision below

thwarts these goals. Amici have a significant interest

in establishing that Iskanian’s rule prohibiting the

enforcement of an arbitration provision’s PAGA representative-action waiver is preempted by the FAA,

much as the FAA has negated many other rules evincing California’s deep hostility to arbitration.

─────  ─────

SUMMARY OF ARGUMENT

Workers and companies often agree to arbitrate their disputes. Their arbitration agreements often include provisions requiring bilateral arbitration

and foreclosing representative claims. See, e.g., Epic,

138 S. Ct. at 1619–20. The FAA requires courts “to

enforce arbitration agreements according to their

terms—including terms providing for individualized

proceedings.” Id. at 1619.

4

California courts have chafed at this mandate

and developed numerous devices to avoid it. See, e.g.,

Concepcion, 563 U.S. at 342. Those devices include

rules frustrating the enforcement of provisions requiring individualized arbitration proceedings.

In Concepcion, this Court struck down a California Supreme Court rule that had rendered classaction waivers in arbitration agreements unenforceable, holding that when parties agree to resolve disputes by individualized arbitration, those agreements

are enforceable under the FAA and contrary state

laws are preempted. Id. at 338, 340–41, 344–52.

Undeterred, California courts have circumvented Concepcion by allowing workers to pursue representative PAGA claims. PAGA “authorizes an employee who has been the subject of particular Labor

Code violations to file a representative action on behalf of himself or herself and other aggrieved employees.” Williams v. Superior Ct., 398 P.3d 69, 74 (Cal.

2017). This aggrieved employee is empowered to “obtain civil penalties, which are then shared between

the affected employees and the state.” Mendoza v.

Nordstrom, Inc., 393 P.3d 375, 378 n.5 (Cal. 2017). In

Iskanian, the California Supreme Court refused to enforce provisions requiring individual arbitration

(thereby waiving representative PAGA claims) because they violate California’s public policy. This socalled “Iskanian rule” did not offend the FAA, the

court decided, because the FAA applies to private disputes while PAGA claims are qui tam actions in which

individual workers pursue public claims for relief.

California courts therefore deem PAGA claims to be

5

“nonarbitrable.” Brooks v. AmeriHome Mortg. Co.,

260 Cal. Rptr. 3d 428, 432 (Ct. App. 2020).

The FAA is nearly a dead letter in California

wage-and-hour cases because a plaintiff “may always

sidestep an arbitration agreement simply by filing a

PAGA claim.” Rivas v. Coverall N. Am., Inc., 842 F.

App’x 55, 58 & n.1 (9th Cir. 2021) (Bumatay, J., concurring), petition for cert. filed, 2021 WL 3772913

(U.S. Aug. 20, 2021) (No. 21-268). Since the Iskanian

rule “clearly ... runs afoul of the FAA and must be

preempted,” id. at 59, this Court should say so now to

stop this end-run around the FAA in its tracks.

Iskanian’s reasoning depends on labeling a

PAGA claim as a qui tam claim. But States may not

evade the Constitution through labels: courts look beyond labels to assess how state laws operate in practice to determine whether they violate the Constitution. This rule applies with full force here since the

Supremacy Clause requires state courts to abide by

the FAA’s mandate to enforce arbitration provisions

as written. A practical assessment reveals that PAGA

actions do not operate as qui tam claims because, unlike traditional qui tam claims, they vest the named

plaintiff with virtually exclusive control over the litigation and seek to vindicate the interests of both the

government and aggrieved workers. In short, PAGA

actions operate as little more than private representative claims. This Court should therefore hold that, for

arbitration agreements governed by the FAA, state

and federal courts must enforce PAGA representative-action waivers just as they must enforce class-action and collective-action waivers in any other private

dispute.

6

Moreover, even if this Court were to treat

PAGA claims as exclusively governmental claims,

this Court’s precedent still requires the enforcement

of PAGA representative-action waivers, for three reasons. First, in Epic, this Court applied the FAA to a

federal government enforcement action brought by

the National Labor Relations Board to enforce its own

public rights, for which no private right of action existed. The FAA must equally apply to state government actions via the Supremacy Clause. Second, the

FAA applies to qui tam claims because they belong in

part to plaintiffs asserting them on the government’s

behalf. This ownership interest suffices to allow plaintiffs to bind the government to their arbitration agreements. Third, in Equal Employment Opportunity

Commission v. Waffle House, Inc., 534 U.S. 279

(2002), this Court indicated that the FAA should apply to governmental claims where the litigation is controlled by a private individual who agreed to arbitration. That is the case here. An employee who brings a

PAGA claim enjoys almost complete control over the

litigation, displacing the government as master of the

case.

For these reasons, this Court should reverse

the California Court of Appeal’s decision and hold

that the FAA preempts Iskanian’s PAGA rule, requiring the enforcement of PAGA representative-action

waivers in arbitration agreements as written.

─────  ─────

7

ARGUMENT

I.

THE FAA PREEMPTS THE ISKANIAN

RULE’S PROHIBITION AGAINST PAGA

REPRESENTATIVE-ACTION WAIVERS.

Despite this Court’s precedent interpreting the

FAA, pockets of “judicial antagonism toward arbitration” remain, and some courts have devised rules hostile to “individualized arbitration proceedings.” Epic,

138 S. Ct. at 1623.

California courts serially thwart the enforcement of arbitration agreements. E.g., Concepcion, 563

U.S. at 341–42. Again and again—in a line of cases

stretching back decades, e.g., Perry v. Thomas, 482

U.S. 483 (1987); Preston v. Ferrer, 552 U.S. 346

(2008); Concepcion, 563 U.S. 333; DIRECTV, 577 U.S.

47; Epic, 138 S. Ct. 1612; Lamps Plus, Inc. v. Varela,

139 S. Ct. 1407 (2019)—this Court has rebuffed rules

adopted by courts in California that impede arbitration or otherwise frustrate the FAA’s objectives.

The Iskanian rule, which prohibits enforcement of an arbitration agreement’s PAGA representative-action waiver, is just such a device. The rule cannot be squared with this Court’s precedent construing

the FAA, which requires enforcement of arbitration

agreements as written, including their representative-action waivers.

The FAA requires courts to enforce agreements

to arbitrate statutory claims, Shearson/Am. Express,

Inc. v. McMahon, 482 U.S. 220, 226 (1987), including

statutory wage-related claims, Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 n.2 (1991);

8

Perry, 482 U.S. at 486, 491. And the FAA “direct[s]

[courts] to respect and enforce the parties’ chosen arbitration procedures.” Epic, 138 S. Ct. at 1621. That

mandate includes “rigorously” enforcing “terms that

specify with whom the parties choose to arbitrate

their disputes and the rules under which that arbitration will be conducted.” Id. (citation omitted).

Consistent with this mandate, the Court in

Concepcion held that the FAA requires enforcement

of representative-action waivers in arbitration agreements. 563 U.S. at 340–52. The Court reaffirmed Concepcion’s rule after Iskanian, holding that courts must

enforce arbitration provisions requiring “individualized proceedings.” Epic, 138 S. Ct. at 1619; see id. at

1621–23. After Epic, the Court again emphasized that

parties cannot be compelled to forgo “the ‘traditional

individualized arbitration’ envisioned by the FAA” by

being forced to submit to representative proceedings,

and held that arbitration agreements must instead be

enforced “‘according to their terms.’” Lamps Plus, 139

S. Ct. at 1412, 1415.

The Iskanian rule conflicts with Concepcion,

Epic, and Lamps Plus. Iskanian refused to enforce as

written a provision in an arbitration agreement in

which all parties “agree[d] that class action and representative action procedures shall not be asserted.”

327 P.3d at 133. The plaintiff there filed a PAGA lawsuit in court. The California Supreme Court held that

arbitration provisions requiring individuals to “give

up the right to bring representative PAGA actions in

any forum” were “contrary to [California] public policy” and therefore unenforceable. Id.

9

Iskanian thus adopted the very rule the FAA

preempts: a rule refusing to enforce as written arbitration provisions requiring solely individualized proceedings, consistent with the traditional form of bilateral arbitration envisioned by the FAA. See, e.g., Rivas, 842 F. App’x at 59 (Bumatay, J., concurring) (explaining that Iskanian’s rule “clearly” interferes with

“parties’ choice to engage in individual, bilateral arbitration” and therefore “runs afoul of the FAA and

must be preempted”); Sakkab v. Luxottica Retail N.

Am., Inc., 803 F.3d 425, 442 (9th Cir. 2015) (N.R.

Smith, J., dissenting) (explaining that Iskanian’s rule

“prohibits representative action waivers in arbitration agreements” and is therefore indistinguishable

from rule preempted in Concepcion).

Indeed, since PAGA actions closely resemble

class actions, the Iskanian rule flouts the FAA’s mandate no less than the rules held preempted in Concepcion, Epic, and Lamps Plus. The plaintiff in a PAGA

action is a representative who has been “subjected to

at least one unlawful employment practice,” Kim v.

Reins Int’l Cal., Inc., 459 P.3d 1123, 1130 (Cal. 2020),

and is authorized to pursue relief “for violations involving employees other than the PAGA litigant herself,” ZB, N.A. v. Superior Ct., 448 P.3d 239, 243–44

(Cal. 2019). Thus, PAGA actions, like class actions,

“allow an individual (who can normally only raise his

or her own individual claims) to bring an action on

behalf of other people or entities.” Sakkab, 803 F.3d

at 442–43 (N.R. Smith, J., dissenting). This plaintiff

can seek the same broad representative discovery authorized by class action procedures. Williams, 398

P.3d at 74, 78, 81.

10

PAGA actions thus entail all the burdens and

potential abuses of collective litigation that class actions bring, but without the basic due process safeguards built into the class action mechanism. A PAGA

judgment “is binding not only on the named employee

plaintiff” but also on “any aggrieved employee not a

party to the proceeding.” Arias v. Superior Ct., 209

P.3d 923, 933 (Cal. 2009). Yet the plaintiff need neither notify the non-party workers of the PAGA suit

nor allow them to opt out. Turrieta v. Lyft, Inc., 284

Cal. Rptr. 3d 767, 781 (Ct. App. 2021), petition for review granted, 2022 WL 57711 (Cal. Jan. 5, 2022) (No.

S271721); see also Arias, 209 P.3d at 926, 934. Other

due process protections inherent in class actions are

absent too. See Arias, 209 P.3d at 926, 932–34; Fed.

R. Civ. P. 23. For example, while class representatives

must demonstrate their claims are typical of those of

absent members, Linder v. Thrifty Oil Co., 2 P.3d 27,

31 (Cal. 2000), PAGA plaintiffs face no such typicality

requirement and can represent employees who have

not experienced the same violations as the plaintiffs,

see Huff v. Securitas Sec. Servs., 233 Cal. Rptr. 3d 502,

509–510 (Ct. App. 2018).

II.

CALIFORNIA COURTS CANNOT EVADE

THE FAA’S MANDATE BY LABELING

PAGA ACTIONS AS QUI TAM ACTIONS

BECAUSE PAGA CLAIMS ARE NOT GOVERNMENTAL CLAIMS.

In Iskanian, the California Supreme Court

held that the FAA does not apply to PAGA claims, offering two related justifications. 327 P.3d at 133, 147–

53. Neither justification holds water.

11

First, believing that “the FAA aims to ensure

an efficient forum for the resolution of private disputes,” the court distinguished private claims (subject

to the FAA) from public claims (not subject to the

FAA). Id. at 149–50. Second, the court characterized

a PAGA claim as “fundamentally a law enforcement

action designed to protect the public”—“a type of qui

tam action”—that was therefore “unwaivable.” Id. at

147–48, 151 (citations omitted). In the court’s view, “a

PAGA action is a dispute between an employer and

the state.” Id. at 149.

Applying this rationale, subsequent California

cases have distinguished Epic and Concepcion as applying only to private class and collective claims, not

to “a governmental claim” under PAGA. E.g., Correia

v. NB Baker Elec., Inc., 244 Cal. Rptr. 3d 177, 185,

187–88 (Ct. App. 2019).

Viking River is understandably dubious that

Iskanian properly characterized PAGA as creating a

claim belonging exclusively to the State. (Opening Br.

40–43.) Viking River is correct. This Court should

hold that the FAA applies to PAGA claims despite the

“qui tam” label the California Supreme Court affixes

to them.

States cannot circumvent the Constitution

through mere labels, NAACP v. Button, 371 U.S. 415,

429 (1963), and courts therefore look behind labels to

see how state measures operate in practice when determining whether those measures violate the Constitution, Wisconsin v. J.C. Penney Co., 311 U.S. 435,

443–44 (1940). “[T]he descriptive pigeon-hole into

which a state court” places a state measure “is of no

12

moment in determining the constitutional significance” of the measure. Id. at 443.

Dodging constitutional scrutiny through artful

labeling is no more persuasive in this context. State

courts must abide by the FAA, which is “‘the supreme

Law of the Land,’ U.S. Const., [a]rt. VI, cl. 2.” NitroLift Techs., L.L.C. v. Howard, 568 U.S. 17, 21 (2012)

(per curiam). Thus, “under the Supremacy Clause,”

any state law that conflicts with the FAA “must give

way.” Perry, 482 U.S. at 491; accord Marmet Health

Care Ctr., Inc. v. Brown, 565 U.S. 530, 531 (2012) (per

curiam). Since whether a state law can thwart the enforcement of an arbitration provision to which the

FAA applies is a question of constitutional significance, state courts may not evade the FAA by the labels they place on state-law claims.

What’s more, California’s label is wrong. PAGA

claims do not function in practice as qui tam claims.

So Iskanian’s device for evading the FAA fails on its

own terms.

Iskanian equated PAGA claims with federal

qui tam claims under the False Claims Act (FCA). Iskanian, 327 P.3d at 148. The individual asserting an

FCA claim on the federal government’s behalf is

called a “relator.” United States ex rel. Eisenstein v.

City of New York, 556 U.S. 929, 932 (2009). The FCA

assigns part of the government’s claim to this relator,

making the relator an interested party with a right to

pursue the claim. Vt. Agency of Nat. Res. v. United

States ex rel. Stevens, 529 U.S. 765, 773–74 (2000).

Even so, the government “may take complete control

of the case if it wishes.” Magadia v. Wal-Mart Assocs.,

13

Inc., 999 F.3d 668, 678 (9th Cir. 2021) (citation omitted). “Under the FCA, for instance, the federal government can intervene in a suit, can settle over the

objections of the relator, and must give its consent before a relator can have the case dismissed.” Id. “These

‘significant procedural controls’ ensure that the government maintains ‘substantial authority over the action,’” retaining “a significant role in the way the action is conducted.” Id. (citation omitted).

California’s False Claims Act (CFCA)—the

state’s counterpart to the FCA, State v. Pac. Bell Tel.

Co., 48 Cal. Rptr. 3d 427, 431 (Ct. App. 2006)—operates similarly. The CFCA authorizes relators to prosecute qui tam claims. State ex rel. Bartlett v. Miller,

197 Cal. Rptr. 3d 673, 678 (Ct. App. 2016). This relator must “notify the Attorney General and disclose all

pertinent information about the lawsuit in his or her

possession.” Id. “After investigation the State or political subdivision may elect to intervene in the qui tam

action and assume control of the lawsuit.” Id. “If there

is no intervention, the qui tam plaintiff may prosecute

the action for, and in the name of, the State or the

relevant political subdivision.” Id. The CFCA also “allows the state or political subdivision to intervene in

an action with which it initially declined to proceed, if

the interests of the state or political subdivision are

not being adequately represented by the qui tam

plaintiff.” Hobbs v. Verizon Cal., No. B228482, 2011

WL 2937148, at *4 (Cal. Ct. App. July 19, 2011).

These protections vest the State and its political subdivisions with the same type of substantial control

over CFCA qui tam actions as the federal government

possesses over FCA claims.

14

PAGA does not operate in this fashion. Magadia, 999 F.3d at 677. Once the State declines to act in

the short time window before a PAGA action is filed,

“the State has no authority under PAGA to intervene

in a case brought by an aggrieved employee.” Id.

“PAGA thus lacks the ‘procedural controls’ necessary

to ensure that California—not the aggrieved employee (the named party in PAGA suits)—retains

‘substantial authority’ over the case.” Id.

PAGA also diverges from qui tam statutes in

another significant respect. It “creat[es] an interest in

penalties, not only for California and the plaintiff employee, but for nonparty employees as well.’” Id. at

676. This feature “is atypical (if not wholly unique) for

qui tam statutes.” Id. “For example, none of the other

modern qui tam statutes” that this Court has mentioned “authorize suits on behalf of non-parties or involve payments to non-parties.” Id. at 676 n.5 (citing

Vt. Agency, 529 U.S. at 769 n.1). Thus, “[w]hile California may be a ‘real party in interest’” in a PAGA action, the PAGA claim “also implicates the interests of

other third parties.” Id. at 677.

This feature “conflicts with qui tam’s underlying assignment theory—that the real interest is the

government’s, which the government assigns to a private citizen to prosecute on its behalf.” Id. at 676. It

thereby “undermines the notion that the aggrieved

employee is solely stepping into the shoes of the State

rather than also vindicating the interests of other aggrieved employees.” Id. at 677.

PAGA therefore departs sharply from traditional qui tam statutes like the FCA. Id. at 678. Given

15

these critical differences between PAGA claims and

qui tam claims, the Ninth Circuit has held that uninjured named plaintiffs pursuing PAGA claims in federal court cannot satisfy constitutional standing requirements under this Court’s Vermont Agency decision, notwithstanding Iskanian’s qui tam label. Id. at

674–78. 2 Other circuit courts “have likewise concluded that comparable statutes are not qui tam [statutes] for purposes” of constitutional standing requirements, particularly because they did not provide the

government with the procedural safeguards necessary to control the action. Id. at 678 (collecting cases).

Simply put, “[b]ecause an aggrieved employee

pursues the PAGA action in his own name, exercises

complete control over the lawsuit, and is not restrained by any provision of the PAGA statute from

settling or disposing of the claim as he sees fit,” a

PAGA representative action “is much more akin to a

private action between private parties in which the

State has a beneficial interest.” Nanavati v. Adecco

USA, Inc., 99 F. Supp. 3d 1072, 1082–83 (N.D. Cal.

2015), abrogated by Sakkab, 803 F.3d at 433. “As a

dispute that is, at its core, between private parties,

the terms of their arbitration agreement control” under the FAA. Id. at 1083.

In a similar vein, the Ninth Circuit has also concluded that

a federal statutory exception to the automatic bankruptcy stay

provision—specifically, an exception for claims by governmental

units—does not apply to a representative PAGA claim because

the named plaintiff’s claim “remains under his control.” Porter v.

Nabors Drilling USA, L.P., 854 F.3d 1057, 1059, 1060–62 (9th

Cir. 2017).

2

16

For these reasons, this Court should hold that,

for purposes of the FAA, PAGA claims are private representative actions rather than qui tam claims

brought on behalf of the government. This Court

should therefore apply Concepcion and its progeny to

conclude that the FAA requires courts to enforce

PAGA representative-action waivers in arbitration

agreements just as the FAA requires courts to enforce

class-action and collective-action waivers in any private disputes involving representative claims.

This is so despite the California Supreme

Court’s insistence that PAGA creates a “public” claim.

Iskanian, 327 P.3d at 150–51. This Court has repeatedly applied the FAA to statutory claims involving socalled public rights.

For example, this Court has applied the FAA to

wage-and-hour claims brought under the federal Fair

Labor Standards Act and California labor laws. See

Epic, 138 S. Ct. at 1619–20. All of those claims involve

“public” rights. See, e.g., Davis v. O’Melveny & Myers,

485 F.3d 1066, 1082–83 (9th Cir. 2007) (“[E]mployment rights under the FLSA and California’s Labor

Code are ‘public rights’.”), overruled on another

ground as recognized by Ferguson v. Corinthian Coll.,

Inc., 733 F.3d 928, 933–37 (9th Cir. 2013) (holding

that this Court’s precedent overruled Davis’s erroneous view that FAA did not require arbitration of

claims involving public rights). Similarly, this Court

has held that “[t]he Sherman Act, the Securities Exchange Act of 1934, [the Racketeer Influenced and

Corrupt Organizations Act], and the Securities Act of

1933 all are designed to advance important public policies,” yet even so “claims under those statutes are

17

appropriate for arbitration” under the FAA. Gilmer,

500 U.S. at 28. Likewise, the Court has held that the

FAA requires the arbitration of claims brought under

the Age Discrimination in Employment Act, id. at 26–

28, even though that statute affords public rights, e.g.,

Davis, 485 F.3d at 1082.

This Court’s precedent requires courts to apply

the FAA to claims asserting public rights. That PAGA

claims purportedly involve public rights therefore

cannot displace the preemptive mandate of the FAA.

III.

THE FAA APPLIES TO PAGA CLAIMS

EVEN IF THEY ARE GOVERNMENTAL

CLAIMS.

A.

Governmental claims are subject to

the FAA under Epic.

Even if—indulging Iskanian’s fiction—PAGA

claims are governmental claims, the FAA’s preemptive mandate still applies. This is so because, under

Epic, the FAA applies to governmental claims.

Epic consolidated and resolved three separate

cases. In resolving one of these cases, Murphy Oil

USA, Inc. v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015),

this Court affirmed the Fifth Circuit’s application of

the FAA to a government enforcement action akin to

a PAGA claim. See Epic, 138 S. Ct. at 1632.

Murphy Oil was a government enforcement action brought by the National Labor Relations Board;

it was not initiated by a private employee as an individual or class action. The Board’s General Counsel

issued an administrative complaint accusing an

18

employer of violating the National Labor Relations

Act (NLRA) by requiring employees to agree to individual arbitration of any employment disputes. Murphy Oil, 808 F.3d at 1016. The General Counsel pursued NLRA claims only the government could prosecute—statutory public rights to collective action that

are “enforced one way: by the Board, through its processes.” Murphy Oil USA, Inc., 361 N.L.R.B. 774,

774–75, 780–82 (2014).

Applying the NLRA, the Board ruled that the

employer had committed unfair labor practices by inducing employees to waive representative proceedings through its arbitration agreements. See id. Nothing in the FAA compelled a contrary conclusion, the

Board asserted, because the General Counsel sought

to vindicate rights “enforced solely by the Board—

there is no private right of action under the [NLRA].”

Id. at 781–82. After all, the NLRA “vindicates public,

not private rights.” Gurley v. Hunt, 287 F.3d 728, 732

(8th Cir. 2002). Thus, the Board’s determination that

the FAA yields to the NLRA rested on the perceived

difference between claims belonging to the government and claims belonging to private plaintiffs. See

Murphy Oil, 361 N.L.R.B. at 779, 781–82.

But the Fifth Circuit applied the FAA and reversed in part. Murphy Oil, 808 F.3d at 1015. In construing the FAA and NLRA harmoniously—to “have

‘equal importance in our review’ of employment arbitration contracts”—the Fifth Circuit unmistakably

applied the FAA to a government-initiated enforcement action. Id.

19

In Epic, this Court affirmed the Fifth Circuit’s

Murphy Oil decision, 138 S. Ct. at 1632, thereby joining the Fifth Circuit in rejecting the Board’s analysis.

In refusing to abide by the FAA’s mandate because no

private right of action was implicated, Murphy Oil,

361 N.L.R.B. at 781–82, the Board had fastened onto

an irrelevant distinction between public and private

claims. That same distinction persuaded the California Supreme Court to exempt PAGA claims from the

FAA’s scope in Iskanian. Thus, the reasoning on

which Iskanian and its progeny relied cannot be

squared with Epic.

It is true that Murphy Oil concerned claims belonging to the federal government, while Iskanian insists that PAGA claims belong to a state government.

But this distinction cannot support an argument that

state claims evade FAA scrutiny while federal claims

do not. Epic affirmed the application of the FAA to an

enforcement action brought by the federal government, so the Supremacy Clause dictates that the FAA

must apply with equal force to enforcement actions

brought on behalf of a state government. See supra p.

12; see also Am. Express Co. v. Italian Colors Rest.,

570 U.S. 228, 252 (2013) (Kagan, J., dissenting) (“We

have no earthly interest (quite the contrary) in vindicating [preempted state] law.”).

Nor does it make a difference that Murphy Oil

was an enforcement action brought by the government itself rather than a qui tam action brought by a

proxy on behalf of the government. Given that Epic

affirmed Murphy Oil’s application of the FAA to an

enforcement action commenced by the government

20

itself, the FAA must likewise apply where a proxy

sues on the government’s behalf.

B.

Even absent Epic, the FAA covers

qui tam claims because they belong

to the relator, who can bind the government to arbitration of those

claims.

If anything, the very nature of a qui tam claim

confirms that the named plaintiff asserting such a

claim on the government’s behalf binds the government to an arbitration provision to which the plaintiff

previously agreed before becoming the relator.

The relator “is the party” in a qui tam action.

Eisenstein, 556 U.S. at 932. In contrast, though the

federal government is a “‘real party in interest,’” it is

not automatically a “party.” Id. at 934 (citation omitted). Absent intervention by the government, the relator is the sole “party.” Id. at 932–34 (citation omitted). In other words, by partially assigning its claim

to the relator, the government makes the relator the

sole interested party pursuing the claim. Vt. Agency,

529 U.S. at 773–74.

Due to this partial assignment, the government

and relator are “both real parties in interest.” Eisenstein, 556 U.S. at 934 (citation omitted). Where parties pursue assigned claims, they are asserting “legal

rights of their own.” Sprint Commc’ns Co. v. APCC

Servs., Inc., 554 U.S. 269, 290 (2008) (emphasis omitted). Thus, the qui tam claim belongs to both the relator and the government. See, e.g., United States ex

rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161,

21

1167 (10th Cir. 2009) (“The portion of the [FCA] claim

assigned to the relator, namely the amount the relator is entitled to recover in a successful action, belongs

to the relator to a sufficient degree” to allow defendant to enforce the release of the FCA qui tam claim to

which relator agreed before filing the claim.). In sum,

because the qui tam claim “both assigns the Government’s injury in fact [to the relator] (Sprint) and turns

the relator into a real party in interest (Eisenstein),

the relator must also own the claim” and therefore,

under this Court’s precedent, “employers can compel

relators to arbitrate the qui tam claims” since “those

claims belong to relators as ‘partial assignees.’”

Mathew Andrews, Whistling in Silence: The Implications of Arbitration on Qui Tam Claims Under the

False Claims Act, 15 Pepp. Disp. Resol. L.J. 203, 227–

29 (2015).

Relators who have agreed to arbitration can

therefore be compelled to arbitrate their qui tam

claims. E.g., United States ex rel. Hicks v. Evercare

Hosp., No. 12-cv-887, 2015 WL 4498744, at *3 (S.D.

Ohio July 23, 2015) (compelling arbitration of qui tam

claim); Deck v. Miami Jacobs Bus. Coll. Co., No. 12cv-63, 2013 WL 394875, at *6–8 (S.D. Ohio Jan. 31,

2013) (same); see also United States v. Bankers Ins.

Co., 245 F.3d 315, 325 (4th Cir. 2001) (“Statutory civil

claims are subject to the arbitration process,” and

there is “no valid basis for placing the FCA claim in a

different category.”). Thus, individual workers asserting PAGA claims can bind the State to the arbitration

agreements they entered into when they first started

working for the company. Valdez v. Terminix Int’l Co.

Ltd., 681 F. App’x 592, 594 (9th Cir. 2017).

22

California courts disagree. Insisting that the

State is the sole real party in interest in a PAGA action, e.g., Correia, 244 Cal. Rptr. 3d at 179, 189–91,

they reason that a PAGA claim belongs only to the

government and that “[t]here is no individual component to a PAGA action,” Kim, 459 P.3d at 1131.

But this view collides with the nature of a qui

tam action, in which both the relator and the government are real parties in interest. See Eisenstein, 556

U.S. at 932–34. California courts cannot have it both

ways: they cannot (1) insist that PAGA claims fall outside the FAA’s scope because they are qui tam claims

(where the government and relator both have an ownership interest in the claim) while (2) at the same time

refusing to treat PAGA claims like qui tam claims by

deeming the government the sole real party in interest.

Either PAGA claims are not truly qui tam

claims, in which case the California Supreme Court

cannot evade the FAA’s application to PAGA claims

based on their supposed qui tam nature, or PAGA

claims are qui tam claims that relators may agree to

address through arbitration due to their ownership

interest in the claims. Either way, the FAA requires

enforcement of the PAGA representative-action

waiver in the named plaintiff’s arbitration agreement.

23

C.

Regardless, the FAA still applies because the named plaintiffs control

the prosecution of the claims.

There is an independent reason why the FAA

applies to PAGA claims, even if they are governmental claims: the virtually exclusive control over the litigation that PAGA grants to named plaintiffs.

This Court has indicated that the FAA applies

to a governmental claim where the litigation of that

claim can be “dictated” by a private individual who

agreed to arbitration and the government is not “the

master of its own case.” Waffle House, 534 U.S. at 280,

291. That aptly describes a PAGA claim. The named

plaintiff in a PAGA lawsuit wields almost complete

control over the litigation—far more than an FCA relator. PAGA “lacks the ‘procedural controls’ necessary

to ensure that California—not the aggrieved employee (the named party in PAGA suits)—retains

‘substantial authority’ over the case.” Magadia, 999

F.3d at 677. Once the named plaintiff commences the

PAGA action, “the State has no authority under

PAGA to intervene in a case brought by an aggrieved

employee.” Id. In short, the State “does not have supervisorial authority over the employee in the [PAGA]

litigation”—rather, at most, the government “must be

provided with prior notice of any proposed [PAGA]

settlement, and the [trial] court must approve the final settlement.” Correia, 244 Cal. Rptr. 3d at 184. It

makes no sense to say named plaintiffs exercise virtually exclusive control over the litigation of PAGA

claims yet cannot elect to include PAGA claims in arbitration agreements governed by the FAA.

24

The California Supreme Court maintained that

Waffle House is distinguishable because it “involved a

suit by the government seeking to obtain victim-specific relief on behalf of an employee bound by the arbitration agreement,” while a named plaintiff who

brings a PAGA claim seeks “to obtain remedies other

than victim-specific relief, i.e., civil penalties paid

largely into the state treasury.” Iskanian, 327 P.3d at

151. This view ignores Waffle House’s caveat—the

FAA may have applied to bar the EEOC’s claim based

on the employee’s arbitration agreement had the employee possessed the authority to control the EEOC’s

case, see Waffle House, 534 U.S. at 291. That is precisely the type of unfettered control PAGA plaintiffs

possess.

Iskanian implied that, had Waffle House not

been distinguishable on this erroneous rationale, it

might compel the conclusion that the FAA precludes

altogether the arbitration of PAGA claims because

they are governmental claims. See 327 P.3d at 150–

51. This view is wrong. Waffle House merely held that

the FAA did not bar a court action commenced by the

government where the statutory scheme vested the

government with complete control over the lawsuit.

534 U.S. at 282, 290–96; see also id. at 298 (emphasizing EEOC’s “exclusive authority over the choice of

forum and the prayer for relief once a charge has been

filed”); Preston, 552 U.S. at 359 (explaining that Waffle House “addressed the role of an agency” that

“pursu[ed] an enforcement action in its own name”).

Waffle House did not say that the FAA would not apply if a private employee, rather than the

25

government, was the master of the lawsuit and had

agreed to arbitrate.

That is the case with PAGA. A PAGA claim is

commenced not by a governmental agency but by a

private plaintiff—here, the very person who expressly

agreed to bilateral arbitration instead of representative court proceedings—whom PAGA vests with virtually complete control over the litigation. (Opening

Br. 37–39.) Under Waffle House, this is the type of

claim that can be barred by a representative-action

waiver in an arbitration agreement enforceable under

the FAA. See 534 U.S. at 291–292.

IV.

THE FAA’S SAVING CLAUSE DOES NOT

PREVENT THE FAA FROM PREEMPTING ISKANIAN’S PAGA RULE.

Unlike California state courts, the Ninth Circuit does not hold that the FAA is inapplicable to

PAGA claims. See, e.g., Sakkab, 803 F.3d at 434. But

the Ninth Circuit has followed Iskanian for a different

reason: Iskanian’s prohibition against representativeaction waivers is supposedly a generally applicable

contract defense, which the FAA saves from preemption. Id. at 432–40. That rationale is wrong under this

Court’s precedent.

First, while the FAA’s saving clause “allows

courts to refuse to enforce arbitration agreements”

based on “generally applicable contract defenses,”

Epic, 138 S. Ct. at 1622 (citations omitted), that

clause cannot save the Iskanian rule from preemption

because Iskanian is expressly founded on California’s

“public policy” against provisions requiring individual

26

arbitration that waive representative PAGA claims,

327 P.3d at 133, and is therefore not a generally-applicable contract defense. The FAA does not preserve

from preemption state or federal rules that invalidate

arbitration provisions for policy reasons. See, e.g.,

Epic, 138 S. Ct. at 1622, 1632 (holding that arbitration agreements requiring individual arbitration had

to be enforced according to their terms regardless of

any federal public policy vindicating federal labor

laws); Marmet Health, 565 U.S. at 533–34 (vacating

decision holding arbitration agreement unenforceable

based on state public policy). “In the [FAA], Congress

has instructed federal courts to enforce arbitration

agreements according to their terms,” and courts are

“not free to substitute [their] preferred economic policies for those chosen by the people’s representatives.”

Epic, 138 S. Ct. at 1619, 1632.

Second, even contract defenses that purportedly have general applicability are preempted by the

FAA when, in reality, such defenses “derive their

meaning from the fact that an agreement to arbitrate

is at issue” or “prohibit[ ] outright the arbitration of a

particular type of claim.” Kindred Nursing Ctrs. Ltd.

P’ship v. Clark, 137 S. Ct. 1421, 1426 (2017) (quoting

Concepcion, 563 U.S. at 339, 341); see id. (“The [FAA]

also displaces any rule that covertly accomplishes the

same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration

agreements.”). The Iskanian rule falls afoul of both

these strictures. It prohibits outright the arbitration

of an entire category of claims: “a PAGA claim lies

outside the FAA’s coverage,” Iskanian, 327 P.3d at

386, so California courts consider it “nonarbitrable,”

27

Brooks, 260 Cal. Rptr. 3d at 432. Consequently, California courts allow plaintiffs asserting wage-and-hour

claims to circumvent an arbitration agreement simply

by filing a PAGA claim. See Rivas, 842 F. App’x at 58

& n.1 (Bumatay, J., concurring). And the Iskanian

rule is “the type of defense that targets an arbitration

agreement ‘just because it requires bilateral arbitration,’ which the Court held doesn’t survive the FAA.”

Id. at 59 (quoting Epic, 138 S. Ct. at 1623).

Third, the FAA preempts even generally applicable state laws that “interfere[ ] with fundamental

attributes of arbitration and thus create[ ] a scheme

inconsistent with the FAA.” Concepcion, 563 U.S. at

344. In Concepcion, this Court held that California’s

rule frustrating the enforceability of class-action

waivers in arbitration agreements did just that (and

was therefore preempted by the FAA). There, a state

rule requiring a switch from bilateral arbitration to

class proceedings made “the process slower, more

costly, and more likely to generate procedural morass,” called for “procedural formality,” and “greatly

increase[d] risks to defendants.” Id. at 348–50. The

Iskanian rule invalidating PAGA representative-action waivers does the same thing, and that rule is also

preempted by the FAA.

For example, the Iskanian rule makes the litigation process slower and more costly. Plaintiffs asserting representative PAGA claims can seek to recover penalties for thousands—or even hundreds of

thousands—of individuals. See, e.g., Turrieta, 284

Cal. Rptr. 3d at 771–72 (affirming PAGA settlement

for group estimated “to include a maximum of 565,000

individuals”). “A PAGA action may thus cover a vast

28

number of employees, each of whom may have markedly different experiences relevant to the alleged violations.” Wesson v. Staples the Off. Superstore, LLC,

283 Cal. Rptr. 3d 846, 859 (Ct. App. 2021). Since “a

PAGA claim can cover disparate groups of employees

and involve different kinds of violations raising distinct questions,” PAGA actions are exceedingly complex. Id. at 860. Unsurprisingly, PAGA claims are

“substantially slower” and “substantially more costly”

to litigate than to individually arbitrate. Sakkab, 803

F.3d at 445 (N.R. Smith, J., dissenting); see, e.g., Espinoza v. Hepta Run, Inc., No. B306292, 2022 WL

167770, at *1–2, *2 n.4 (Cal. Ct. App. Jan. 19, 2022)

(describing procedural case history reflecting that

representative PAGA claim took more than two years

to proceed to trial); Wesson, 283 Cal. Rptr. 3d at 854

(explaining that trial court had estimated plaintiff’s

PAGA claim would require a “trial lasting more than

four years”); Driscoll v. Granite Rock Co., No. 1-08CV-103426, 2011 WL 10366147 (Cal. Super. Ct. Sept.

20, 2011) (entering defense judgment on PAGA claim

that took nearly four years to proceed to a bench trial

lasting 14 days and involving 55 witnesses and 285

exhibits).

Representative PAGA proceedings in court also

involve higher stakes and higher risks than bilateral

arbitration. As with class claims, penalties sought in

representative PAGA proceedings routinely run into

the millions—even billions—of dollars. See, e.g., Turrieta, 284 Cal. Rptr. 3d at 771–72, 775 n.7 (affirming

approval of $15 million PAGA settlement, over objections of plaintiffs from other PAGA cases who claimed

billions of dollars in PAGA penalties).

29

Furthermore, representative PAGA proceedings in court involve far more procedural formality

than individual arbitration. PAGA discovery can extend “as broadly as class action discovery has been extended”; the California Supreme Court has rebuffed

efforts to cabin the “broad discovery” authorized for

PAGA claims. Williams, 398 P.3d at 74, 78, 81. The

parties in a PAGA case would, “at a minimum,” need

“costly and time-consuming” discovery “into how

many employees may have suffered violations and

how many times such violations occurred.” Teimouri

v. Macy’s, Inc., No. D060696, 2013 WL 2006815, at

*17 (Cal. Ct. App. May 14, 2013).

Likewise, representative PAGA proceedings in

court often devolve into a procedural morass. “[D]etermining whether the employer committed Labor Code

violations with respect to each employee” implicated

by a PAGA claim “may raise practical difficulties and

may prove to be unmanageable.” Wesson, 283 Cal.

Rptr. 3d at 859. “Indeed, PAGA claims may well present more significant manageability concerns than

those involved in class actions.” Id. at 859–60.

These same considerations led this Court to

conclude in Concepcion that a state-law rule barring

class-action waivers was preempted by the FAA. See

563 U.S. at 348–50. Thus, the FAA preempts the Iskanian rule because it “burdens arbitration in the

same three ways identified in Concepcion.” Sakkab,

804 F.3d at 444 (N.R. Smith, J., dissenting).

30

V.

RESPONDENT’S CONCERNS ABOUT

THE WAIVER OF REPRESENTATIVE

PAGA CLAIMS CANNOT RENDER THE

FAA INAPPLICABLE.

Respondent has argued that the FAA cannot

require enforcement of PAGA representative-action

waivers because the FAA “does not provide for enforcement of agreements that claims cannot be pursued at all” (Opp’n 17) and the enforcement of such a

waiver would effectively prevent the State from asserting such a claim (Opp’n 19). According to Respondent, enforcing such waivers would improperly allow “defendants to excuse themselves from liability . . . .” (Opp’n 17.) Respondent contends this

Court’s precedent bars such a result (Opp’n 17–19) because Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 628 (1985), said: “By

agreeing to arbitrate a statutory claim, a party does

not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral,

rather than a judicial, forum.”

This argument relies on a mistaken premise.

The enforcement of a PAGA representative-action

waiver waives no one’s substantive rights nor otherwise insulates the defendant from liability.

PAGA “is simply a procedural statute allowing

an aggrieved employee to recover civil penalties—for

Labor Code violations—that otherwise would be

sought by state labor law enforcement agencies.”

Amalgamated Transit Union, Loc. 1756 v. Superior

Ct., 209 P.3d 937, 943 (Cal. 2009). As a result,

“[p]reventing a plaintiff from using this [PAGA]

31

procedure has no effect on the state’s property rights”

in civil penalties. Wesson, 283 Cal. Rptr. 3d at 860

n.14. “[T]he State remains entitled to recover civil

penalties for any Labor Code violations by the employer, subject to the applicable statute of limitations.” Id. 3

PAGA civil penalties may also be sought by a

different PAGA proxy (a fellow aggrieved worker) who

did not consent to arbitration. See Sakkab, 803 F.3d

at 449 (N.R. Smith, J., dissenting) (explaining that

“any employee not subject to an arbitration agreement waiving such [representative PAGA] actions is

free to bring a PAGA claim,” and that nothing prevents the State “from raising the labor violations on

its own”).

In any event, even if PAGA representative-action waivers did waive substantive state rights (which

is not the case), this Court’s precedent would not prevent the FAA from requiring the enforcement of such

waivers. The passage Respondent cherry-picks from

This is not merely a theoretical proposition, as recent litigation in California against Uber Technologies shows. Drivers who

agreed to individual arbitration brought representative PAGA

claims in court against Uber, alleging that Uber misclassified

them as independent contractors in violation of California law.

E.g., Gregg v. Uber Techs., Inc., No. B302925, 2021 WL 1561297,

at *1–2 (Cal. Ct. App. Apr. 21, 2021), petition for cert. filed, 2021

WL 4353008 (U.S. Sept. 21, 2021) (No. 21-453). Even so, California’s Attorney General and Labor Commissioner are also suing

Uber based on the same misclassification theory. See, e.g., People

v. Uber Techs., Inc., 270 Cal. Rptr. 3d 290, 302 (Ct. App. 2020);

Complaint, Garcia-Brower v. Uber Techs., Inc., No. RG20070283

(Cal. Super. Ct. Aug. 5, 2020), 2020 WL 4729151.

3

32

Mitsubishi Motors was dicta suggesting a willingness

to invalidate an arbitration agreement that operates

as a prospective waiver of a party’s right to pursue

federal statutory remedies—dicta that has since become known as the “‘effective-vindication’ exception”

to the FAA. Am. Express, 570 U.S. at 235–36. But this

Court has never applied this dicta to invalidate any

arbitration agreements. Id. Moreover, this theoretical

exception would apply solely to waivers of “a federal

statutory right.” Id. at 235 (emphasis added); see id.

at 252 (Kagan, J., dissenting) (acknowledging that

federal courts have “no earthly interest (quite the contrary) in vindicating [state] law” since the “effectivevindication rule comes into play only when the FAA

is alleged to conflict with another federal law”).

Thus, “if a state law violates or frustrates the

FAA, the state law must give way, even if such a decision prevents the state’s interest from being vindicated.” Sakkab, 803 F.3d at 449 (N.R. Smith, J., dissenting); see id. at 433 n.9 (majority opinion) (rejecting contention that effective-vindication exception invalidates PAGA representative-action waivers, because this exception “does not extend to state statutes” (citation omitted)). The State cannot, as a matter of its own public policy, override the FAA’s mandate by dictating that any particular aggrieved employee may invoke PAGA’s representative-action procedure. Id. at 449–50 (N.R. Smith, J., dissenting). It

violates the FAA for California to adopt rules and procedures favoring one or more plaintiffs by enabling

them to exploit PAGA’s representative-action procedure after they have entered into arbitration agreements waiving the right to do so. See Epic, 138 S. Ct.

33

at 1621 (holding that FAA “seems to protect pretty absolutely” arbitration agreements providing for individualized rather than representative procedures).

─────  ─────

CONCLUSION

This Court should reverse the decision of the

California Court of Appeal.

Respectfully submitted,

HORVITZ & LEVY LLP

PEDER K. BATALDEN

FELIX SHAFIR

Counsel of Record

JOHN F. QUERIO

WASHINGTON LEGAL

FOUNDATION

CORY L. ANDREWS

JOHN M. MASSLON II

ATLANTIC LEGAL

FOUNDATION

LAWRENCE S. EBNER

Counsel for Amici Curiae

Washington Legal Foundation

and Atlantic Legal Foundation

February 4, 2022