Wage and Hour Case Notes
| Publication year | 2022 |
| Author | Nicole R. Roysdon |
AUTHOR*
Nicole R. Roysdon
Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022)
In a much-anticipated decision, the United States Supreme Court ruled on whether the Federal Arbitration Act (FAA) preempts the rule enunciated under Iskanian v. CLS Transportation, 59 Cal. 4th 348 (2014), which invalidates contractual waivers of the right to bring a representative action under California's Private Attorneys General Act (PAGA). Employers received a victory of sorts, but it may be short-lived based on guidance from Justice Sotomayor in her concurring opinion.
Plaintiff filed a PAGA action, despite having entered into an arbitration agreement with her former employer Viking River Cruises, 142 S. Ct. 1906 (2022), whereby she agreed to waive her right to bring a class, collective, or PAGA representative action. Viking moved to compel arbitration of plaintiff's individual PAGA claim and to dismiss her other PAGA claims. Applying the Iskanian rule, the California courts denied the motion, holding that PAGA waivers are not enforceable and such claims cannot be split into arbitrable "individual" claims and non-arbitrable "representative" claims. The U.S. Supreme Court granted certiorari to decide whether the FAA preempts the Iskanian rule.
In an 8-1 decision, the Supreme Court held that the FAA preempts the Iskanian rule to the extent it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. Although the Court did not find the FAA preempts Iskanian as a whole, because "[n]othing in the FAA establishes a categorical rule mandating enforcement of" PAGA waivers, the Court did determine that Iskanian's prohibition on dividing PAGA claims into individual and non-individual components was in conflict with the FAA. In practical effect, this indivisibility rule functioned to coerce parties into litigating PAGA claims in court, as opposed to in arbitration. Because this portion of the Iskanian rule was preempted by the FAA, the Court determined Viking was entitled to compel arbitration of plaintiff's individual claim.
The Court then considered what to do with the non-individual PAGA claims. The Court concluded that the statute does not provide a way to adjudicate non-individual PAGA claims once an individual PAGA claim has been ordered to arbitration. Further, based on PAGA's statutory language and prior California court decisions interpreting the statute, the Court concluded a plaintiff's standing to bring non-individual PAGA claims is tethered to maintaining their own individual claims in the action. Thus, because plaintiffs ordered to arbitrate their individual PAGA claim lack standing to continue pursuing non-individual claims in court, a court would be required to dismiss the non-individual PAGA claims.
In her concurring opinion, Justice Sotomayor invited the California Legislature and/or courts to address the Supreme Court's ruling. In particular, Justice Sotomayor stated:
Of course, if this Court's understanding of state law is wrong, California courts, in an appropriate case, will have the last word. Alternatively, if this Court's understanding is right, the California Legislature is free to modify the scope of statutory standing under PAGA within state and federal constitutional limits.
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Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022)
Plaintiff, an airline ramp supervisor, brought a collective action against her employer, Southwest Airlines, alleging violations of the Fair Labor Standards Act (FLSA). Southwest moved to dismiss the lawsuit on the grounds that plaintiff agreed to arbitrate wage disputes individually. In response, plaintiff argued she belonged to a "class of workers engaged in foreign or interstate commerce" as set forth in § 1 of the Federal Arbitration Act (FAA) and, thus, was exempt from the FAA's coverage. The district court granted Southwest's motion to dismiss, finding only those involved in "actual transportation" fall within the exemption. The Seventh Circuit reversed, holding that loading cargo onto a vehicle to be transported interstate constitutes commerce. Because the Seventh Circuit's decision conflicted with the Fifth Circuit's decision in Eastus v. ISS Facility Services, Inc., 960 F.3d 207 (5th Cir. 2020), the U.S. Supreme Court granted certiorari to resolve the disagreement.
In deciding whether plaintiff fell within a "class of workers engaged in foreign or interstate commerce," the Supreme Court first defined the relevant "class of workers" to which plaintiff belonged. In rejecting plaintiff's contention that all airline employees constituted the relevant "class of workers" under section 1 because the airline industry is engaged in interstate commerce, the Supreme Court relied on the FAA's use of the words "workers," which calls attention to the performance of work, and the word "engaged," which emphasizes the actual work that members of the class carry out. Based on the ordinary meaning of these words, the Court concluded plaintiff was a member of a "class of workers" based on the work she did at Southwest generally, and not the work Southwest did generally. In addition to training and supervising the work of ramp agents, who load and unload baggage, airmail and commercial cargo on and off airplanes that travel across the country, plaintiff also frequently engaged in loading and unloading cargo alongside the ramp agents. Accordingly, the Court held plaintiff belonged to a class of workers who physically load and unload cargo on and off airplanes.
Next, the Supreme Court determined whether the airplane cargo loader "class of workers" to which plaintiff belonged was "engaged in foreign or interstate commerce." The Court again examined the plain meaning of the text under section 1. The Court noted that to be "engaged" means to be "occupied," "employed," or "involved." "Commerce" includes "the transportation of . . . goods both by land and sea." The Court thus concluded that "any class of workers directly involved in transporting goods across state or international borders falls within section 1's exemption," which encompasses airplane cargo loaders. The Court relied on one of its prior cases from 1924 in holding it "plain that airline employees who physically load and unload cargo on and off planes traveling in interstate commerce are, as a practical matter, part of the interstate transportation of goods," and form "'a class of workers engaged in foreign or interstate commerce.'"
The Court noted that context confirms this reading. It pointed out that in Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001), it relied on two well-settled canons of statutory interpretation to conclude that section 1 only exempts transportation workers from the FAA and "that any such worker must at least play a direct and 'necessary role in the free flow of goods' across borders." In other words, "transportation workers must be actively 'engaged in transportation' of those goods across borders via the channels of foreign or interstate commerce." With this understanding, the Court affirmed that airplane cargo loaders are transportation workers because they are "intimately involved with the commerce (e.g., transportation) of that cargo."
Further, because section 1's definition of exempted "maritime transactions" includes "agreements relating to wharfage . . . or any other matters in foreign commerce," and a wharf is simply a cargo-loading facility, "[i]t stands to reason, then, that if payments to access a cargo-loading facility relate to a 'matte[r] in foreign commerce,' then an individual who actually loads cargo on foreign-bound ships docked along a wharf is himself engaged in such commerce." Relying on this statutory context, the Court found that "any class of workers that loads or unloads cargo on or off airplanes bound for a different State or country is 'engaged in foreign or interstate commerce.'"
In reaching this interpretation, the Court rejected plaintiff's arguments that the relevant class of workers should be defined more broadly, as well as Southwest's arguments that it should be defined more narrowly. Plaintiff argued that section 1's use of "railroad employees" and "seamen" refers generally to employees in those industries, and that airline workers have the same relationship to commerce as railroad and ship employees in general. However, the Court found premise holding that "seamen" only refers to those who work on board the ship. Thus, the statutory text did not support plaintiff's argument that section 1 exempts all employees working for transportation providers.
Southwest also relied on the definition of "seamen" to argue that section 1 only exempts those airline employees who
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ride on the airplane. However, since "railroad employees" are not clearly limited to just those workers who ride on the train, the Court found neither term can be used to limit the catchall "class of workers" provision. Southwest also argued that cargo loading was similar to other activities that the Court previously found were not sufficiently related to interstate commerce. The Court was not persuaded, because the cases Southwest relied upon all involved activities farther removed from interstate commerce (i.e., intrastate sales of asphalt that were later used to make interstate highways) than that of loading and unloading cargo from an airplane. Finally, the Court was not convinced by Southwest's reliance on the FAA's "proarbitration purposes," finding that the plain text of section 1 was sufficient to show that airplane cargo loaders fall within its scope. Thus, the Court exempted airplane cargo loaders from the FAA.
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