SCOTUS suddenly very interested in California's Private Attorney General Act

(Reuters) - It may be time for lawyers who represent employees in Private Attorney General Act cases in California to start worrying about the U.S. Supreme Court.

In PAGA cases, employees stand in the shoes of the state in representative actions to police employment law violations, with 75% of any recovery going to California and 25% to workers. Plaintiffs file thousands of PAGA suits annually.

In recent months, PAGA defendants have filed a flurry of petitions asking the U.S. Supreme Court to rein in the suits, arguing that employers are entitled to require individual arbitration of PAGA claims. PAGA defendants contend that the U.S. justices must reverse the California Supreme Court, which held in 2014’s Iskanian v. CLS Transportation Los Angeles LLC that the Federal Arbitration Act does not permit employers to require employees to waive the right to litigate PAGA claims as representative actions in court.

Those petitions are nothing new, in and of themselves. In the first few years after the California high court’s Iskanian decision, PAGA defendants sought U.S. Supreme Court review in at least nine cases. The U.S. justices were distinctly uninterested and denied all of the petitions.

Now, however, there are signs that the Supreme Court’s interest in PAGA has been piqued. The justices have called for plaintiffs to file response briefs in six cases in which PAGA defendants have petitioned for review. Most of those briefs are due in December.

And in another hint that the court is planning a long, hard look at all of the issues arising from PAGA’s intersection with the Federal Arbitration Act, the justices have not yet even scheduled a conference in the longest-pending PAGA case, Viking River Cruises Inc v. Moriana, even though briefing was completed in the case in September.

Viking River’s petition, the first in the recent wave of requests for Supreme Court review by PAGA defendants, received considerable attention. It attracted significant amicus support from pro-business groups. It also caught the eye of at least one justice: After the petition circulated to the justices, the court issued a request for a response from Angie Moriana, the employee who brought the PAGA case. (It only takes one justice to call for a response from the other side.)

Moriana’s lawyers at the Law Offices of Kevin T. Barnes and the Public Citizen Litigation Group filed their brief opposing Supreme Court review in early September. Viking’s lawyers at Kirkland & Ellis replied on Sept. 28. The Supreme Court has done nothing since.

That delay in the justices’ consideration of the fully briefed Viking case suggests that the court is waiting for briefs in the other five pending PAGA cases in which it has requested responses from employees, so it can review all of the PAGA certiorari candidates at the same time.(I emailed Viking counsel Paul Clement of Kirkland and Moriana counsel Kevin Barnes to ask about the delayed conference in their case but didn’t receive any response.)

Four of the five other pending PAGA petitions at the Supreme Court were filed by Gibson, Dunn & Crutcher, two in PAGA lawsuits against Uber Technologies Inc and two in cases against Postmates LLC. The Uber and Postmates petitions all requested review of California appellate rulings that the companies could not compel individual arbitration of PAGA claims. The fifth pending PAGA case in which the Supreme Court has requested a response from employees is Coverall North America Inc v. Rivas, which asks the justices to reverse a ruling from the 9th U.S. Circuit Court of Appeals that allowed a PAGA claim to proceed.

Judge Patrick Bumatay's concurrence in the 9th Circuit’s Coverall decision encapsulates the arguments that PAGA defendants are making to the U.S. Supreme Court. The 9th Circuit essentially endorsed the California Supreme Court’s Iskanian rule in its 2015 decision in Sakkab v. Luxottica Retail North America Inc, which held that the FAA does not preempt the California high court decision. But, as Bumatay explained in his Coverall concurrence, defendants contend that subsequent U.S. Supreme Court decisions, most notably 2016’s Epic Systems Corp v. Lewis, undermined the California and 9th Circuit precedent holding PAGA claims to be outside the bounds of the Federal Arbitration Act. (In Epic, the Supreme Court held that workers' right to engage in concerted actions under the National Labor Relations Act did not preclude enforcement of mandatory individual arbitration provisions and class action waivers in employment contracts.)

Bumatay said he agreed with the PAGA defendants: “Our precedent is in serious need of a course correction,” he wrote. “The writing is on the wall that the [Supreme] Court disfavors our approach.”

Not surprisingly, Coverall’s counsel, Norman Leon of DLA Piper, quoted Bumatay in the company’s Aug. 20 Supreme Court petition, arguing that the Iskanian and Sakkab decisions “have effectively nullified thousands upon thousands of arbitration agreements” despite “the teachings of this court in its recent FAA decisions.”

Leon said by email that he’s hopeful that the Supreme Court’s call for additional briefing on so many new PAGA petitions “indicates a willingness to address this issue.”

Shannon Liss-Riordan of Lichten & Liss Riordan represents employees in two of the PAGA cases in which the Supreme Court has requested a response brief, the Coverall case and one of the Postmates lawsuits. She told me she’s not sure what to make of the court’s apparently newfound interest in years-old PAGA precedent. “They’ve turned this down repeatedly, and nothing has changed,” she said. “Epic addressed a completely different issue.”

The opposition brief in the Viking River case similarly argued that the Supreme Court has already turned down at least two previous PAGA petitions that argued Epic was a game-changer. “Nothing about that argument is new,” the brief said. “Iskanian and Sakkab are fully consistent with Epic.”

The arguments may not be new, but the composition of the court is different than it was in 2019, when the justices rejected a petition that squarely presented the question of whether Epic dictated reversal of the Iskanian rule.

We don't know if all of the foment in the Supreme Court's pending PAGA docket will end with a certiorari grant, much less a decision that PAGA claims can be compelled to arbitration. But if I were a PAGA lawyer, I'd be nervous.

Opinions expressed here are those of the author. Reuters News, under the Trust Principles, is committed to integrity, independence and freedom from bias.

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