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Horvitz & Levy persuaded the Ninth Circuit to vacate a district court’s decision to compel its client to arbitrate a representative PAGA claim.

California’s Private Attorneys General Act (PAGA) permits an “aggrieved employee” to bring a representative action on behalf of current or former employees to recover civil penalties for wage-related violations of California’s Labor Code. In Viking River Cruises, Inc. v. Moriana, the United States Supreme Court held that the Federal Arbitration Act (FAA) preempted California law insofar as it prevented PAGA actions from being divided into individual and representative claims and thereby thwarted the enforcement of agreements to arbitrate individual PAGA claims.

Based on Viking River, Macy’s filed a motion in federal district court to compel the arbitration of an employee’s individual PAGA claim and for the dismissal of the employee’s representative PAGA claim. The district court granted the motion as to the individual claim but, over Macy’s objection, also compelled the parties to engage in the representative arbitration of the representative PAGA claim.

Macy’s appealed. Horvitz & Levy represented Macy’s on appeal and persuaded the Ninth Circuit to affirm the district court’s order to the extent it compelled the employee to arbitrate her individual PAGA claim and to vacate the order to the extent it required the arbitration of the representative PAGA claim. Although the Ninth Circuit rejected the contention that Viking River imposed a federal rule of decision requiring the dismissal of non-individual PAGA claims, the Ninth Circuit allowed Macy’s to renew in the district court the FAA preemption challenges (advanced on Macy’s behalf by Horvitz & Levy) to California’s state-law prohibition against the dismissal of such claims.