A federal judge in the U.S. District Court for the Eastern District of California has found a PAGA (Private Attorneys General Act) lawsuit is bound by the recent U.S. Supreme Court ruling in Viking v. Moriana, which found claims filed under California’s PAGA are subject to federal arbitration rules.
District Judge Troy L. Nunley issued the decision in Johnson v. Lowe's Home Centers, LLC last month.
“I think it is a great decision and the court is upholding a reasonable decision by the U.S. Supreme Court, Tom Manzo, founder and president of CABIA (California Business and Industrial Alliance), told the Northern California Record.
Manzo noted that since the high court’s Viking decision this past June, more business owners have inquired about arbitration to address excessive wage and hour litigation, as the PAGA statute has drawn criticism for being a tool abused by plaintiff attorneys.
“Everybody needs to make sure they have a current arbitration agreement,” Manzo said. “They’re that important; it’s the difference between a class action lawsuit and settling with the individual employee.”
Meanwhile, the California Supreme Court has denied review of CABIA’s case about PAGA’s constitutionality, California Business and Industrial Alliance v. Becerra, which argued that California hasn’t overseen the PAGA notice process and left it to trial lawyers, in violation of the separation of powers doctrine.
“There's no oversight on people that are suing on behalf of the State,” Manzo said. “The Supreme Court by not hearing the case totally invalidated the PAGA notice process.
“It's a complete sham and nobody wants to say, ‘Oh, wait a minute. The system is really broken and it's not working.’ Everyone gets penalized, no matter what, because of lack of oversight.”
It remains unclear what action the Legislature may take to address the Viking ruling, or how another court challenge, Adolph v. Uber, could affect arbitration here.
“They’re going to continue to try and take PAGA cases to the California Supreme Court, one being Adolph v. Uber Technology,” Manzo said. “So, great decision on this Lowe’s case, following it perfectly, but the trial bar is going to continue to attack and try and undo PAGA in arbitration."
Meanwhile, a citizen’s movement to replace PAGA has qualified a ballot initiative for the November 2024 election.