Last week, the Supreme Court handed down its decision in Viking River Cruises Inc. v. Moriana. The majority held that a California employee bound by an arbitration clause does not have standing (under current law) to bring “private attorney general” claims against her employer on behalf of the state. This result forecloses an important legal tool for California workers in the short term, but it isn’t all bad news! Amidst the majority’s legal wreckage, a concurrence from Justice Sotomayor illuminates a promising path forward for organizers, policymakers, and litigators to rebuild power through state law.
While Viking River was far from the most devastating decision released this term, the decision presents new challenges for folks fighting to hold employers accountable for wage theft, discrimination, and other violation of workers’ rights. To help explain the decision and unpack its implications for workplace justice, we asked Myriam Gilles, David Seligman, Andrew Elmore, Rachel Deutsch, Molly Coleman, and Luke Norris for their reactions.
Viking River evinces the Supreme Court’s longstanding disdain for the concept of private enforcement of public law. But unlike prior cases, Justice Alito’s decision leaves open a tantalizing possibility for future enforcement of public rights.
At issue in Viking was California’s policy against enforcing “PAGA waivers”—i.e., clauses in standard-form agreements that waive the ability to bring claims under the Private Attorney General Act of 2004, which authorizes “aggrieved employees” to bring suit “personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations.”
The majority opinion held, in essence, that California is free to ban PAGA waivers—i.e., the state may determine the means by which it will enforce its laws, including by deputizing private parties to bring enforcement actions. But where an arbitration clause mandates that claims proceed on an individual basis, the Court held that the Federal Arbitration Act (FAA) directs that clause be enforced as written, such that the individual is contractually barred from seeking redress for harms suffered by others in her PAGA claim. As a result, the ruling all but forecloses PAGA claims, weakening the ability of employees to enforce labor code violations and other workplace misconduct.
An observer might wonder why the Court would bother to hold that the FAA does not preempt PAGA claims themselves, since all PAGA claims seek relief on behalf of others. Justice Barrett, joined by Justice Kavanaugh and Chief Justice Roberts, appeared baffled by this in her separate concurrence. Justice Barrett would have gone straight to the preemption ruling without making all the congenial (and arguably contradictory) noises about how the PAGA claim itself is not preempted.
But Justice Alito’s congenial noises—possibly intended as vote-getting chum for the Court’s three liberals—may prove consequential. As Justice Sotomayor notes in concurrence, California’s courts or legislature may yet decide that an individual PAGA plaintiff—even if she is forced to arbitrate her own claim in an individualized proceeding—may nonetheless have standing to step into the shoes of the state enforcers and helm a PAGA action on behalf of all other aggrieved employees in state court.
Viking River sets up interesting choices for California courts and legislators—and then, perhaps, another battle royale at the Supreme Court. The smart money is betting Justice Barrett gets the nod to take the next whack at the public attorney general pinata.
Viking River affirmed states’ authority to address the enforcement crisis spurred by the proliferation of forced arbitration clauses and class waivers. The Court’s affirmation of state authority in Viking River, however, is not a self-executing victory for workers. It’s a call to action for state and local policymakers. In the face of burgeoning corporate power, coercive contracts that strip workers and consumers of hard-fought legal protections, and a Court hostile to the rights of workers, it’s up to states and cities to pursue bold and creative policies that truly empower workers and check corporate abuse.
In her dissent in American Express v. Italian Colors, one of the worst of the Court’s horrendous line of arbitration cases, Justice Kagan wrote that “[t]o a hammer, everything looks like a nail. And to a Court bent on diminishing the usefulness of Rule 23 [the rule governing class actions], everything looks like a class action, ready to be dismantled.”
For decades, the Federal Arbitration Act has been the conservative Court’s hammer. Through cases like Circuit City, Rent-A-Center, Concepcion, Italian Colors, and Epic Systems, the Court has stretched the FAA well beyond its text to squelch workers’ and consumers’ rights under hard-fought federal and state protections that so often depend on class actions to be enforceable. The result has been that corporations can write their own get-out-of-jail free cards into the fine print of their terms and conditions.
Viking River is the most recent in a long line of cases where the Court foreclosed, at least in part, an important mechanism for enforcement of workplace rights—in this case, California’s Private Attorney General Act. But the majority’s analysis, which was joined by Justices Kagan, Sotomayor, and Breyer, identifies important limits to the Supreme Court’s FAA jurisprudence that highlight a path forward for California and states around the country.
The anti-worker payoff off Viking River is that by requiring individual or bilateral arbitration, employers can write their arbitration clauses to override PAGA’s “joinder mechanism,” under which claims related to violations of the rights of a plaintiff’s co-workers can be joined into a case involving claims about violations of the plaintiff’s rights.
That’s where followers of SCOTUS’s arbitration case law would have expected things to take a turn for the worse. The Court might have said that in these contexts, as a matter of federal law, a PAGA plaintiff’s claims related to violations of the rights of co-workers are gone forever if the worker is covered by a bilateral arbitration provision. But the FAA couldn’t bring the Court’s conservatives all the way there.
That is because PAGA actions aren’t class actions. PAGA is a qui tam enforcement mechanism under which the plaintiff does not pursue claims on their own behalf but rather on behalf of the state. The Court rightfully concluded that the FAA speaks only to a PAGA plaintiff’s right to join together various claims into class-like proceedings inside arbitration; that was the Rule 23-looking nail that the Court sought to hammer out. But it did not and could not conclude that the FAA requires enforcement of contractual waivers of the right to bring PAGA representative actions on behalf of the state. This means that the FAA doesn’t require enforcement of arbitration provisions that force workers to waive their right to bring PAGA claims involving violations affecting their own rights or violations affecting the rights of coworkers. That’s a critical victory for workers and a critical victory for states exploring private-public enforcement models that will expand enforcement capacity.
Now, the Court’s conclusion that the FAA requires enforcement of arbitration provisions that preclude joinder of PAGA claims creates substantial uncertainty for tens of thousands of workers in California whose rights under state law may be violated but who are covered by arbitration clauses, written by their employers, that require individual arbitration. If state law prohibits a PAGA plaintiff from splitting claims involving violations of their own rights from claims involving violations of coworkers’ rights, then an arbitration clause prohibiting joinder of claims (now enforceable under Viking River) may spell doom for claims related to violations affecting coworkers. But if state law permits the splitting of qui tam PAGA claims, then a PAGA plaintiff confronting a bilateral arbitration provision could continue to assert claims relating to violations affecting them in a separate proceeding from claims affecting coworkers.
Whatever the rule is currently in California, Viking River represents an important acknowledgement: As distorted by the Court, the FAA may give powerful corporations the authority to design arbitration to their liking, but it does not override states’ authority to address the enforcement crisis through their own enforcement tools. Most importantly, qui tam or whistleblower enforcement mechanisms remain viable paths for ensuring that states can enforce their laws without having to quadruple their enforcement budgets. States may delegate to workers, even those covered by arbitration provision, the right to assert claims on behalf of the state.
PAGA is one example of an avenue states could pursue. But it is not the only one. Colorado recently included a qui tam mechanism in a workplace health and safety whistleblower law. Under that mechanism, a worker can pursue qui tam claims separately from their own individual claims, and the law permits workers’ organizations and others who are unlikely to be covered by arbitration provisions to bring suit on behalf of the state too.
It is not enough for states and cities to pass laws extending new rights to workers and consumers. Policymakers and public enforcers must commit to ensuring those laws are enforced if they are to be anything more than words on a page, and they must commit to providing enforcement tools that truly level the playing field. Over the next several decades state laws and state courts may provide a bulwark against the further erosion of workers’ and consumers’ rights, but that will require organizing and bold and creative action by state policymakers.
Most observers thought that the Supreme Court in Viking River Cruises v. Moriana would find that the FAA requires state court enforcement of a PAGA waiver in an employer’s mandatory (or forced) arbitration agreement. It’s easy to understand why: over the past decade the Supreme Court has refashioned the FAA to stamp out state laws that seek to preserve workers’ access to courts to vindicate workplace rights. But in Viking River, the Supreme Court did something unexpected. It rejected the employer’s argument that PAGA is a class action in disguise controlled by Concepcion and Epic Systems. Unlike a class action, the Court reasoned, in PAGA there is no class certification but rather a single principal (the state), so there are no “problems of notice, due process, and adequacy of representation.” This part of the decision is grounded in a stable line of cases finding that a state can enforce its laws through representative claims. As the Court reasoned, the FAA does not require states to enforce “waivers of standing to assert claims on behalf of absent principals.”
But even as the Court handed a victory to California in choosing how to enforce its laws, it found that a worker’s PAGA claim based on violations of her workplace rights is “individual,” while the portion of the claim involving other employees is “representative.” This overruled the Iskanian rule precluding severing a worker’s individual harm asserted in a PAGA claim from her representative claim. Since PAGA limits standing to “aggrieved parties,” and employees must arbitrate their individual PAGA claim, the Court held, the representative claim that remains in state court must be dismissed for lack of statutory standing. In sum, the workers’ individual PAGA claim must be severed and arbitrated, and the representative action dismissed on state standing grounds, but Viking River leaves states with options for a PAGA-type law.
So, a victory for the states, but not workers? It depends. Crucially, as explained in Justice Sotomayor’s concurrence, state courts have the final say in interpreting PAGA’s jurisdictional bar. The California legislature could also amend PAGA to expressly allow for claimants to litigate a representative claim even as they arbitrate their “individual” PAGA claim. While state courts must apply the FAA, California “is free to modify the scope of statutory standing” under PAGA within constitutional limits. And as Zachary Clopton observes, states do not need to follow federal Article III standing rules. A modest state judicial or legislative intervention that addresses Viking River seems to be in reach.
But, in the end, why does this matter? While forced arbitration with class waivers harms workers in non-union workplaces (workers win less often and recover less in individual arbitration with employers than in court), representative actions are not substitutes for class actions. PAGA only allows claimants to seek a portion of state penalties for violations and lacks the very protections for non-claimant employees that enabled the Court to find that PAGA is not a class action in disguise. As I’ve written, states could more closely supervise representative action settlements to protect worker interests and permit whistleblower claims by third parties not subject to forced arbitration, such as nonprofit public interest organizations. But even so, low-wage workers are often not well served by class actions or representative actions. Too often in the non-union workplace, insurmountable barriers prevent workers from vindicating workplace rights. While the hassle and expense of individually litigating (or arbitrating) a workplace claim is one factor, at-will employees also justifiably fear retaliation if they complain. The core problem, in other words, is a lack of workplace democracy. Effective workplace governance requires meaningful worker participation, which is difficult to fathom without a strong internal safeguard (like a union).
This takes us full circle, to the origins of PAGA. PAGA was enacted in 2004, after a decade of workers’ rights activism in California seeking to improve state workplace regulation, especially in sectors marked by substandard work conditions. While PAGA is a partial fix for the black hole in employment law enforcement created by forced arbitration, it is an open question whether representative claims can address the democracy deficit in workplaces that keeps workers silent. That question now returns to the states, but whether PAGA survives and expands to other states is not so much a state question as an organizing one. It is contingent on whether a new generation of activists embraces representative claims as one tool, among others, to advance workplace democracy.
At a Valero refinery in Benicia, California, Paige Allen and Eboni Foster were sick of being cheated out of a fair day’s pay. Valero wasn’t paying full wages or providing rest or meal breaks. Valero had forced employees to sign an arbitration clause that would have kept workers from enforcing their rights in court, but Allen and Foster used PAGA to secure $375,000 for themselves and their coworkers.
PAGA, which was enacted long before the Supreme Court gave employers the green light to lock workers out of court, has helped California fight workplace abuse in two ways: first, PAGA allows the state to uncover and prosecute far more bad bosses than the Department of Labor Standards Enforcement (DLSE) can on its own. By increasing employers’ risk of real consequences for disregarding workers’ rights, PAGA has helped to shift California’s corporate culture toward compliance, as attorneys and human resources advisors urge corporations to be “preemptive” and “aggressive” in identifying and “quickly remedying” labor code violations. As the VP for labor relations at a large low-wage employer once told me, “Any company doing business in California has to invest in compliance.” Second, DLSE collects about $100 million in PAGA penalties each year, which it has used to hire more investigators and educate workers about their rights.
Viking River’s immediate impact is to prevent the vast majority of Californians from wielding this powerful tool. An estimated 4 out of 5 non-union, private-sector workers are bound by forced arbitration clauses, which the Supreme Court has now declared can bar workers from using PAGA to bring claims to address the full scope of systemic violations of workplace rights. With corporate greed unleashed, real people – especially those who work in low-paid jobs as retail clerks, restaurant servers, rideshare drivers, agricultural laborers – will have their wages stolen, their health compromised, and their dignity trampled. If we don’t act quickly, the harm will reverberate through their families and communities.
Fortunately, the story doesn’t end there. Somehow, a Court devoted to shoring up corporate power and preventing workers from taking collective action has held that states can partner with workers to prosecute workplace abuse. All California has to do now is clarify that PAGA claims can be “split” so that workers with arbitration clauses can pursue these enforcement actions consistent with the Court’s construction of the FAA. If California’s Supreme Court doesn’t do that, its legislature must.
I’m confident that California will emerge from the Viking River setback with a robust qui tam-based tool for enforcing labor standards. I’m proud to live in the state that, thanks to a vibrant labor movement, leads the nation in guaranteeing dignity and safety for all workers. In California, agricultural workers, tipped employees, and domestic workers have successfully fought for inclusion in labor standards that elsewhere leave the most marginalized workers behind. California has also done more than any other state to ensure that workers can participate in enforcing their hard-won rights. Our leaders know that wage theft, hazardous working conditions, and pay discrimination persist and that we need more tools, not fewer, to keep greedy bosses in check.
There’s no denying that no matter where we live, we’re suffering the consequences of an anti-democratic Court. The most flagrantly ideological Supreme Court in recent memory has limited California’s ability to protect my kids from being gunned down at school. But by some miracle, states have emerged from Viking River with authority to enforce workplace rights in partnership with whistleblowers. It’s the duty of state policymakers, in California and elsewhere, to take up Justice Sotomayor’s invitation and ensure that courageous whistleblowers can partner with state agencies in the never-ending battle to keep employers honest.
“Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word. Alternatively, if this Court’s understanding is right, the California Legislature is free to modify the scope of statutory standing under PAGA within state and federal constitutional limits.”
Was Viking River a win for employers? A (surprisingly) good opinion for workers who want to enforce their rights? In a term defined by losses for those who believe that people should wield power over the conditions of their lives, Viking River stands out. While the decision was not immediately heralded as a victory for workers, it definitely wasn’t defeat. That’s largely because the most important issue—whether or not aggrieved workers retain their ability to pursue broader claims in the name of the state even when their individual claims have been funneled into arbitration—remains live. As Justice Sotomayor’s concurrence makes clear, what happens next will be in the hands of state-level actors, either judges or legislators.
For observers of both this court’s jurisprudence and economic justice issues more broadly, this aspect of the decision should be unsurprising. The Supreme Court—and Republicans in Congress—has evidently decided to take the federal government out of the business of running the country, leaving everything from bodily autonomy to workers’ rights as matters of state control.
Given the anti-democratic nature of both the Supreme Court and the Senate, that’s arguably not a bad thing. Democratic accountability for state judges far exceeds that for federal judges: 39 states have “some form of election at some level of court,” and in California, while state supreme court justices are appointed, those appointments are “confirmed by the public at the next general election.” While state legislatures aren’t immune from gerrymandering, the uncompetitive nature of the majority of districts in a state like California fails to rival the lack of democratic control inherent in the current U.S. Senate. Having a federal government that abdicates its duties on the most important issues in the lives of its citizens is far from ideal, but given the alternative of the moment—control by an illegitimate Supreme Court, an anti-democratic Senate, and a gerrymandered House of Representatives—the current reality at least presents us with a path forward for using our collective force to improve the material conditions of working people.
The U.S. Supreme Court’s focus on power is clear. A majority of justices are devoted to ensuring that corporations and the wealthy have power, and that the masses of ordinary people have none. But by sending issues like workers’ rights enforcement to the states, they have delineated a path forward for those who want to put power back in the hands of the people. We have control over what happens next for California’s Private Attorney General Act — we just have to use it.
There is a seeming glimmer of hope at the end of Viking River Cruises v. Moriana: While the plaintiff’s individualized claims under California’s Private Attorney General Act (PAGA) must proceed in arbitration, Justice Sotomayor notes that the Court leaves open the possibility that California could provide standing for plaintiffs to assert non-individual claims—those about labor infractions involving other workers—separately. While there may be reason to celebrate this possibility, it is worth reflecting on the oddity of a world where a plaintiff has to assert an individualized claim in arbitration and claims about violations involving other workers elsewhere.
From the perspective of designing a robust democratic regulatory enforcement system, there are good reasons to have individualized and non-individualized claims proceed together, and in public. Workers’ individualized harms and experiences are often the prism through which they come to understand and gain the gumption to challenge a host of workplace practices—bringing, as I explore in a forthcoming article, the “expertise of experience” to regulatory enforcement processes. Their experiences and those of their co-workers may not be so distinct; together, those experiences can paint a broader picture of a workplace environment and the scope of wrongdoing within it. Even the most worker-friendly reading of Viking River Cruises weakens the ability of employees to leverage their experiences in court and chops up claims that are best advanced together.
Viking River Cruises hollows out democratic regulatory governance in other ways. A vibrant system of regulatory governance should provide open, public pathways for members of the public to enforce, interpret, and potentially entrench regulatory commitments over time. Yet, with this decision and the Court’s other decisions interpreting the Federal Arbitration Act (FAA), so many pathways remain closed for workers. Consider four kinds of claims employees might seek to bring in court. In qui-tam style suits such as those authorized under PAGA, they can assert individualized claims, but do so on behalf of the state, stepping in to bring its claims. They can also—in the same proceeding, or potentially, as Justice Sotomayor suggested, separately—seek to assert non-individualized claims on behalf of the state. Even under PAGA, such claims do not exhaust the universe. In addition, an employee can seek to assert their own claims alleging workplace violations, seeking their own relief. And, finally, employees can band together and aggregate their claims, often seeking class certification. As arbitration clauses become more ubiquitous, three kinds of these claims are likely to be privatized or, in some instances, killed altogether under the Court’s FAA precedents. The sole remaining way—maybe—for citizens to contribute to public processes of regulatory development in courts will be to bring non-individualized claims, involving other workers and advanced on the state’s behalf. That is hardly vibrant democratic regulatory governance worth celebrating. It is a world where corporate-driven privatization is the norm, blessed by the Court even when state governments seek to keep public regulatory processes alive.