WASHINGTON (CN) — The Supreme Court pressed a cruise company fighting a California worker protection law on Wednesday over what some justices called a double standard in the company’s stance on enforcing arbitration agreements.
Viking River Cruises is facing a lawsuit from Angie Moriana and other Viking employees after the former sales representative and her colleagues accused the company of violating the California Labor Code by failing to pay them appropriately, among other violations.
Viking claims Moriana can’t pursue an individual claim because of an arbitration agreement but is also fighting her ability to file a class-action suit.
“That reminds me of a Catch-22,” Justice Stephen Breyer said.
Justice Elena Kagan reiterated that thinking.
“You're sort of trying to have it both ways,” the Obama appointee said. “You're saying this aggregate claim is so different from her individual claim that we can't possibly allow it in arbitration, but then when she goes to court, it turns out to be it's not so different because you're precluding it in court.”
Moriana filed her suit under California’s Private Attorneys General Act, which allows employees to bring suits against employers who violate the labor code on behalf of the state. However, Viking claims Moriana should be forced to settle the allegations through arbitration because of a contract she signed with them agreeing to employment.
A trial court sided with Moriana and said she couldn’t be forced into arbitration under California law. An appeals court affirmed the ruling. The case now sitting before the Supreme Court justices asks if the Federal Arbitration Act requires the enforcement of arbitration agreements despite PAGA and prevents the employee from raising class action claims.
Viking challenges the lower court rulings that place California’s statute above the arbitration agreement between employers and employees. Paul Clement, an attorney with Kirkland & Ellis representing Viking, brought to the justices’ attention that no other state has a law like California’s and no other state sought to advocate for California in the suit.
Clement resisted some justices’ claims that Viking was precluding Moriana from filing any suit.
“Respondent suggests that the waiver here is an invalid effort to immunize Viking rather than a valid effort to preserve bilateral arbitration,” Clement said. “But Viking remains liable to Moriana for any labor code violation that she can prove affected her personally and remains liable to the state for civil and criminal penalties. The only thing that is foreclosed is Moriana’s effort to inject the facts and circumstances of countless other workers into this dispute despite her agreement to arbitrate bilaterally.”
Scott Nelson, an attorney with the Public Citizen Litigation Group representing Moriana, said the FAA does not require agreements like those made between Viking and his client.
“The Federal Arbitration Act does not require enforcement of such an agreement and does not conflict with the anti-waiver rule,” Nelson said. “The FAA’s plain language provides for enforcement of agreements to settle controversies by arbitration, not to bar their assertion altogether. Nothing in its text, structure, purposes or legislative history suggests it was intended as a mechanism for enforcing contractual waivers of statutory rights and remedies.”
Justice Sonia Sotomayor said the cruise company’s suit would prevent California from using its tool for enforcing its labor laws.
“That’s what you're banking on,” the Obama appointee said. “You're banking on destroying the state's mechanism for enforcing labor law violations.”
Kagan said California had a sovereign interest in enforcing its labor laws with this mechanism.
“This is a state decision to enforce its own labor laws in a particular kind of way that the state has decided is the only way to adequately do it,” Kagan said to Clement. “Essentially, your position says, you know, the state just can't make that decision even though that's the way that the state has decided best serves its sovereign interests.”
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