The US Supreme Court ruled 8-1 Wednesday that the Federal Arbitration Act (FAA) partially preempts a California law that invalidates waivers of the right to assert representative claims under the California Private Attorneys General Act (PAGA).

The FAA states that arbitration agreements in specific contracts are valid, irrevocable, and enforceable. PAGA allows aggrieved employees to sue employers on behalf of themselves, other employees, and the state of California for Labor Code violations.

Angie Moriana sued her former employer Viking River Cruises, for Labor Code violations. Moriana’s employment contract contained a mandatory arbitration agreement. The contract included a class action waiver and a severability clause specifying that disputes would be litigated in court if the waiver were found invalid. Under the severability clause, any valid portion of the waiver would be enforced in arbitration. Viking moved to compel arbitration of Moriana’s individual PAGA claim and to dismiss her other PAGA claims. The California Court of Appeal denied the motion to compel arbitration and held that categorical waivers of PAGA claims are contrary to California law. That court also ruled that PAGA claims cannot be split into arbitrable “individual” claims and nonarbitrable “representative” claims.

The Supreme Court sided with Viking and reversed and remanded the California Court of Appeal decision, holding that the FAA preempts PAGA. However, the FAA only preempts the division of PAGA actions into individual and non-individual claims through arbitration agreements. Thus, the Court ruled that Viking is entitled to compel Moriana’s individual claim to go to arbitration. Justice Alito wrote the opinion of the Court. Justice Thomas dissented, stating that the FAA does not apply to proceedings in state courts.