A case involving a San Fernando Valley company that could impact how California employees resolve labor law disputes and conduct arbitration with employers is set to go before the U.S. Supreme Court on March 30.
Angie Moriana was a sales representative for Viking River Cruises Inc. in Woodland Hills and on behalf of hundreds of other workers, filed a Private Attorneys General Act (PAGA) lawsuit in 2018 alleging that the cruise line violated several California labor codes. Claims under PAGA, which went into effect in 2004, allow employees to file lawsuits on behalf of potentially thousands of other employees, according to Kristina Kourasis, attorney and board member of the Greater San Fernando Valley Chamber of Commerce.
Moriana had an employment agreement containing a provision to resolve future disputes through arbitration, stating that the parties involved would not use class or collective procedures. When Viking moved to compel arbitration, the motion was denied under the precedent that PAGA claims could not be compelled to arbitration under state law.
The case, Viking River Cruises Inc. v Moriana, now faces review from the Supreme Court with Viking as the petitioner and Moriana the respondent.
Business organizations
Viking, which has its global marketing headquarters in Woodland Hills, has had its case against Moriana supported by business groups such as the Valley-based California Business and Industrial Alliance, or CABIA. The alliance was formed to lobby against PAGA and submitted an amicus brief in support of Viking.
CABIA Founder and President Tom Manzo said PAGA’s issue is that good, well-meaning employers get dinged over minor technicalities that turn into massive financial losses.
“You always hope that people have good intentions, and you hope when the law was created, they had good intentions,” Manzo said. “But the problem is, in all reality, it’s the most severely abused law in the United States.”
CABIA will travel to Washington D.C. and host a rally and press conference in front of the U.S. Supreme Court on March 30 while the court hears oral arguments. It isn’t the first time the organization has taken unusual steps to call attention to PAGA. In 2018, it held a protest on Ventura Boulevard in front of an Encino law firm involved in PAGA cases. When Amazon.com Inc. announced a national search for a second headquarters location, CABIA took out a full-page ad in USA Today telling the e-commerce giant to avoid California because of “onerous” regulations including PAGA.
With respect to the Viking case, “California employers really need to show their support because I feel it’s a monumental decision,” Manzo said. “This decision, if you’re able to put PAGA back into arbitration where it belongs, it would really make things more manageable when it comes to these types of (lawsuits).”
Kirkland & Ellis LLP, Viking’s counsel, have not released a statement regarding the case. The Law Offices of Kevin T. Barnes, one of the attorneys for Moriana, did not respond to request for comment.
What’s at stake
In its brief filed to the supreme court, Viking stated that the main question of the case is “whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.”
The Federal Arbitration Act is a statute that “protects the integrity of many arbitration agreements by making them binding and limiting the reasons for which courts can review and set aside arbitration awards,” according to the Legal Information Institute at Cornell Law School.
Kourasis wrote in an email that a win for Viking, “would mean that California employers would have the peace of mind that their arbitration agreements with PAGA waivers bar employees from filing frivolous PAGA claims as a means of leveraging a higher settlement with a push of a button, so to speak.”
She added that certain claims could send employers out of business or into a scramble for financial recovery. “Employees could still file individual matters, though, so a favorable ruling would not circumvent justice for employees,” Kourasis wrote.
One organization that wrote a brief supporting Moriana was the American Association for Justice, a non-profit advocacy and lobbying organization for plaintiff lawyers. Matt Wessler of Gupta Wessler in Washington, D.C. spoke to the Business Journal on behalf of the organization.
To Wessler, the question of the case is whether the Federal Arbitration Act mandates the enforcement of a clause waiving a particular claim.
“By waiving, I mean forcing an individual to give up that claim. … California has a rule that says you cannot include that kind of prospective waiver in a contract,” Wessler said. “And the company is arguing that the Federal Arbitration Act preempts that state law rule.”
Wessler added that he has seen an erosion of rights that workers and consumers have through the use of forced arbitration contracts, some of which are used to suppress claims or keep company wrongdoings confidential.
In response to organizations taking issue with PAGA and the financial ruin that technical violations of labor law could bring to a company, Wessler said the case is not about PAGA.
“Really, this case is about an attempt by a company to just opt out of the laws that would otherwise govern it,” Wessler said. “You can work to change laws, you could change where your business is, you can take steps to eliminate your liability by complying with the law, but what you shouldn’t be able to do is opt yourself out of having to comply through contracts that no one can negotiate but has to sign if they want to work at your company.”