NO WORKING FORUMS: HOW THE SUPREME COURT SHOULD RULE IN VIKING RIVER CRUISES, INC. v. MORIANA TO PROTECT EMPLOYEE RIGHTS

By: Ben Parker, Volume 106 Staff Member

Employers and employees have had a tumultuous relationship over the course of recent American history.[1] One change was the rise in arbitration after the passage of the Federal Arbitration Act (FAA) in 1926. The FAA permits employees and employers to use arbitration to resolve controversies when an employee and employer agree to an arbitration clause.[2] The power to use arbitration expanded in 1991 when the Supreme Court held in Gilmer v. Interstate/Johnson Lane Corp. that mandatory arbitration agreements are enforceable.[3] Mandatory arbitration agreements require an employee to use arbitration rather than the courts to resolve a legal dispute with their employer.[4] The Supreme Court has since expanded the power of mandatory arbitration when it held in AT&T Mobility LLC v. Concepcion that mandatory arbitration agreements with class action waivers are enforceable.[5] Since the Court’s decisions in Gilmer and Concepcion, employers have increasingly used mandatory arbitration to prevent employees from using the court system to bring forward legal challenges.[6] Employees have had to utilize state laws or rely on the Federal government as a means to circumvent their mandatory arbitration agreements.[7]

One such way employees in California have challenged their employers is through the California Private Attorneys General Act (“PAGA”). Under PAGA, an employee may bring a civil action “on behalf of himself or herself and other current or former employees . . . .”[8] However, the Supreme Court is soon to hear if arbitration clauses preventing such actions are enforceable or not in Viking River Cruises, Inc. v. Moriana.[9]

I. CALIFORNIA’S PRIVATE ATTORNEYS GENERAL ACT AND MORIANA v. VIKING RIVER CRUISES

In Moriana v. Viking River Cruises, Moriana sued her employer, Viking River Cruises, Inc. (Viking), for multiple Labor Code violations.[10] However, Moriana’s employment contract required her to use binding arbitration for any employment dispute.[11] To circumvent the arbitration provision, Moriana brought the case forward “on behalf of the state and all other similarly situated aggrieved employees” through PAGA.[12] Viking maintained that the PAGA claim should be arbitrated and should not have gone to a trial court.[13]

The California 2nd District Court of Appeal found that the PAGA claim should not have been arbitrated and detailed three main reasons for that decision.[14] First, the Moriana court found that previous case law supports finding waivers that preclude PAGA actions as an attempt for employers to avoid responsibility for labor code violations.[15] Specifically, the Moriana court relied upon Iskanian v. CLS Transportation Los Angeles, LLC, which held that “it is contrary to public policy for an employment agreement to . . . require[] employees to waive the right to bring a PAGA action. . . .”[16] Second, the Moriana court reasoned that, since Moriana is only bringing a representative claim for statutory penalties and not personal claims, her representative claim cannot be subject to mandatory arbitration.[17] Lastly, because PAGA actions are a type of qui tam action[18] and not an individual claim, Moriana was not a representative of the state when she agreed to Viking’s mandatory arbitration provision, so the arbitration provision did not apply to the state.[19] Viking then appealed the court’s decision and the Supreme Court granted certiorari.[20]

II. THE HARMS OF ARBITRATION AND THE NEED TO FURTHER PROTECT EMPLOYEE RIGHTS

The Supreme Court should uphold the Moriana court’s decision to better protect employee rights. The Moriana court’s reasoning follows current jurisprudence and its weariness of limiting employee rights. In Epic Systems Corp. v. Lewis, the Supreme Court, while addressing individual arbitration requirements for National Labor Relation Act claims, cautioned lower courts to “be alert to new devices and formulas” that force employees into arbitration.[21] The Moriana court and other California courts heeded the Supreme Court’s warning.[22] Additionally, the Supreme Court in Epic established that finding ways to compel arbitration and avoid the courts is against public policy.[23] Viking’s mandatory arbitration for PAGA claims is such a device that the Supreme Court warned about. PAGA claims were meant to avoid mandatory arbitration and help protect employee rights.[24] To honor Supreme Court precedent and maintain the intent of PAGA, the Supreme Court should uphold the Moriana court’s decision. This will better protect employees, hold employers accountable, and make employers abide by labor codes.

More importantly, if the Supreme Court finds the mandatory arbitration clause enforceable, then employees will have few resources to successfully challenge their employers. Rather than employees filing actions against their employers, they must rely upon government agencies like the Equal Employment Opportunity Commission (EEOC).[25] However, agencies such as the EEOC may have shorter timelines to bring forward a claim, limited to 300 days, compared to a state’s statute of limitations for its labor laws.[26] The EEOC, on average, takes ten months to fully investigate a charge.[27] This may make the aggrieved employee feel disconnected from the case and what is happening compared to working with an attorney. This disconnect could be why there is a decrease in employees filing claims for labor and employment law violations. The Department of Labor reported only 928 and 966 employees brought forward Family Medical Leave Act (FMLA) claims in 2021 and 2020, respectively, while there were 2,132 and 2,094 claims in 2011 and 2010, respectively.[28] While employees can file an EEOC charge while pursuing arbitration,[29] by forcing employees into arbitration where employers are more likely to succeed,[30] employees may feel disincentivized and demoralized to file a claim with the government. Thus, without any mechanism to hold employers accountable in court, employees may continue to not bring charges against their employers.

Moreover, mandatory arbitration allows employers to avoid labor law violation claims more easily. Employees face a greater challenge in hiring an attorney to represent them in an arbitration because there is little chance of success and, if successful, the damages are smaller.[31] This especially holds true given mandatory arbitration clauses prevent bringing forward a class action, [32] which would encourage attorneys to take smaller individual damages cases. Because of this, fewer employees are pursuing arbitration against their employers. Colvin found that one in 10,400 employees filed a claim through mandatory arbitration in 2016, while it would be expected to “be between 206,000 and 468,000 claims filed annually” through the courts.[33] Therefore, the Supreme Court should uphold the Moriana court’s decision to better protect employee rights and hold employers accountable. Otherwise, there is little hope for employees to represent themselves and challenge their employers in the courtroom.

 

[1] See generally Alana Semuels, How the Relationship Between Employers and Workers Changed, L.A. Times (Apr. 7, 2013), https://www.latimes.com/business/la-xpm-2013-apr-07-la-fi-mo-harsh-work-history-20130405-story.html [https://perma.cc/S35Z-29TR] (detailing how employers have gained more power in the employer-employee relationship since the 1970s).

[2] 9 U.S.C. § 2 (1926).

[3] 500 U.S. 20, 35 (1991).

[4] Alexander J. S. Colvin, The Growing Use of Mandatory Arbitration: Access to the Courts Is Now Barred for More Than 60 Million American Workers, Econ. Pol. Inst. 1, 2 (2018), https://files.epi.org/pdf/144131.pdf [https://perma.cc/WT3Z-QMKH].

[5] 563 U.S. 333, 348 (2011).

[6] Colvin, supra note 4, at 5 (finding that 60.5 percent of employers have implemented mandatory arbitration policies more than five years ago).

[7] See, e.g., Minn. Stat. § 181.932 (2013) (preventing employers from discharging an employee who “reports a violation, suspected violation, or planned violation of any federal or state law or common law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official”).

[8] Cal. Lab. Code § 2699 (West 2016).

[9] Moriana v. Viking River Cruises, Inc., No. B297327, 2020 WL 5584508 (Cal. Ct. App. 2d Dist. Sept. 18, 2020), cert. granted, 2021 WL 5911481 (U.S. Dec. 15, 2021) (No. 20-1573).

[10] Id. at *1.

[11] Id.

[12] Id.

[13] Id.

[14] Id. at *1–2.

[15] Id. at *2.

[16] 327 P.3d 129, 149 (Cal. 2014).

[17] Moriana, 2020 WL 5584508, at *2.

[18] A qui tam action is where the state is the party interested in the suit. Id. at *1.

[19] Id. at *2.

[20] 2021 WL 5911481 (U.S. Dec. 15, 2021) (No. 20-1573).

[21] 138 S. Ct. 1612, 1623 (2018).

[22] Moriana, 2020 WL 5584508, at *1; see also Collie v. Icee Co., 266 Cal. Rptr. 3d 145, 149–50 (Cal. Ct. App. 2020) (holding that PAGA claims are not subject to mandatory arbitration agreements); Correia v. NB Baker Electric, Inc., 244 Cal. Rptr. 3d 177, 189–90 (Cal. Ct. App. 2019) (same).

[23] 138 S. Ct. at 1623.

[24] See Iskanian v. CLS Transportation Los Angeles, LLC, 327 P.3d, 129, 149 (Cal. 2014) (“As noted, the Legislature’s purpose in enacting the PAGA was to augment the limited enforcement capability of the [Labor and Workforce Development] Agency by empowering employees to enforce the Labor Cade as representatives of the Agency.”).

[25] See, e.g., Filing a Complaint, EEOC, https://www.eeoc.gov/youth/filing-complaint [https://perma.cc/BN65-VX4K]. The EEOC primarily deals with discrimination matters. Id. However, employees may also file a claim with the federal or state department of labor or with the Occupational Safety and Health Agency (OSHA). See File a Complaint, OSHA, https://www.osha.gov/workers/file-complaint [https://perma.cc/53EB-XP8J].

[26] Id. (“There are strict time limits for filing a job discrimination complaint with the EEOC. In some cases, you only have 180 days to report discrimination to EEOC. You have 300 days if your complaint is also covered by a state or local anti-discrimination law.”).

[27] See What You Can Expect After You File a Charge, EEOC, https://www.eeoc.gov/what-you-can-expect-after-you-file-charge [https://perma.cc/DSS3-P9H8]; see also The OSHA Inspection: A Step-by-Step Guide, OSHA, https://www.osha.gov/sites/default/files/2018-12/fy10_sh-20853-10_osha_inspections.pdf [https://perma.cc/E2PG-X9Z2] (explaining the various steps OSHA takes to complete an investigation for a safety or health code violation). It is also important to note administrative changes within the Executive Branch, as this can impact how vigorously each agency may go after alleged workplace violations.

[28] See, e.g., Family and Medical Leave Act, Dep’t of Lab., https://www.dol.gov/agencies/whd/data/charts/fmla [https://perma.cc/NY7J-2TQA].

[29] Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991).

[30] See Colvin, supra note 4, at 10–11.

[31] Id. at 10.

[32] Id. at 4.

[33] Id. at 11.