It’s not Monday or the morning, but it is worth the midweek interruption. The United States Supreme Court issued its much anticipated decision in the Viking River Cruises case today, and for those of us on the employer side, it delivered a knock out punch. Justice Alito delivered the decision for the majority, which interestingly, prevailed 8 – 1, with only Justice Thomas dissenting. Some of the other Justices joined in part and concurred in part, and some filed separate, concurring opinions. The decision mainly came down to a technical, pre-emption issue based on the Federal Arbitration Act (FAA), which most of us had predicted.
In the end, the strong powers of the FAA won out again, just as they prevailed in the Epic Systems case back in 2018. It’s also why we predict that the challenge to AB 51 will succeed. If you recall, AB 51 is the law that was supposed to go into effect in 2020 that would have prohibited mandatory arbitration in employment in California. That law was challenged based on the FAA and the principles behind the Epic System line of cases, and all of that was put on hold pending Viking River Cruises. Feels like it we have a better sense of which way the wind is blowing there as well.
Interestingly, I have been scanning social media to try to find all the reports about this case, and it’s been unusually quiet. Is that because this is just a California issue? Or because there is so much other news to report? Or maybe . . .because other law firms are being so quiet about it? Hmmm. I did see one attorney, a mediator, comment that he didn’t predict it would change very much – that he thought maybe attorneys would find new ways around it. Wishful thinking, perhaps. I suspect a lot of plaintiff attorneys are shellshocked. Maybe some defense attorneys, too. Many have been fence sitting this issue of arbitration for years.
As you all know, we have been staunch advocates of putting arbitration clauses into handbooks and agreements for as long as it’s been an option – long before the Iskanian decision in 2014. Even after Iskanian, when many other law firms recommended redrafting their class action waivers to remove or exclude PAGA claims, we held fast and left our class action waivers intact. Our class action waivers have always included all representative actions, PAGA CLAIMS, too, which means our clients now get the benefit of having those class action waivers take immediate force and effect against pending PAGA cases.
Those of you who have pending PAGA litigation with us and who have been using our arbitration agreements including our class action waivers, you already know the value these agreements are bringing you, and will continue to bring you. We are in the process reaching out to counsel to discuss next steps. But what this will generally mean is that we will now attempt to resolve these matters for the price of an individual claim versus attempting to resolve it in the six or seven figure range – which is what attorneys usually want to resolve PAGA cases. That class action waiver is a very valuable tool.
For those of you who don’t have any pending litigation but have our most current handbooks or arbitration agreements, you are good to go. Just make sure you’re getting them all signed, like I always say. If you do not have an up to date employee handbook or arbitration agreement, just contact us. Now is the time.
As luck would have it, I am also fortunate to be speaking on a panel next Tuesday, June 21 at 10a (sponsored by the folks at Kickfin) talking about onboarding! And because onboarding involves hiring documents and arbitration agreements, I will be touching on class action waivers and this case, as well as other issues. The recorded webinar can be viewed here.
For those who have too much time on their hands, you can read the full Supreme Court decision in Viking River Cruises here.
Look, I know that there are going to be naysayers predicting that California will come back with some way around this case. But to be honest, PAGA was always a really bad law. It was horribly drafted. And there is NO reason for it. I agree that there are some bad employers committing some bad acts out there. But PAGA is not the way to catch them. Let’s put more money into the state system for education and enforcement. All PAGA has ever done is fund lawyers to shake down businesses for technical violations. It hasn’t ever FIXED anything really wrong. And then, the money goes to the lawyers and the state! The vast majority doesn’t even go to the employees. It is a boondoggle. It has always been in major need of reform.
Now we can spend our time on efforts that really matter – trying to move the needle where it counts, and hopefully stop funding these ambulance chasing firms.
Well, one can dream, anyway. At least give me today. It is a rare victory.
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