The California Supreme Court Clarifies PAGA Standing

• Published date: 28 July 2023
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Class Actions
• Law Firm: Morrison & Foerster LLP
• Author: Ms Tritia Murata and Jinny S. Hwang

On July 17, the California Supreme Court issued its opinion in Adolph v. Uber Technologies, Inc. (S274671, Cal. Jul. 2023), holding that an employee who has been compelled to arbitrate claims under the Labor Code Private Attorneys General Act of 2004 (PAGA, Cal. Lab. Code ' 2698, et seq.) that are "premised on Labor Code violations actually sustained by the [employee] maintains statutory standing to pursue 'PAGA claims arising out of events involving other employees' in court."

The Viking River Decision

The California Supreme Court's decision in Adolph follows in the wake of Viking River Cruises, Inc. v. Moriana, where'as we previously reported'the United States Supreme Court held that the Federal Arbitration Act (FAA, 9 U.S.C. ' 1, et seq.) preempted California law as set forth in Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014), to the extent it precluded the division of PAGA actions into arbitrable individual claims and nonarbitrable non-individual claims. Under Viking River, an employee's agreement to arbitrate their individual PAGA claims may be enforced. The Supreme Court in Viking River also concluded that where the employee's individual PAGA claims were no longer pending in court, the employee no longer had standing to maintain the remaining "non-individual" representative PAGA claims, warranting their dismissal. After Viking River, many trial courts have entered orders compelling individual PAGA claims to arbitration, with some courts electing to dismiss the remaining non-individual PAGA claims consistent with Viking River, and several others choosing to stay the claims pending the individual arbitrations.

Adolph: Procedural Background

Erik Adolph initially filed a putative class action against Uber Technologies, Inc. (Uber) in October 2019, alleging that he and other individuals were misclassified as independent contractors when they signed up to be delivery drivers on the "Uber Eats" app, and that Uber purportedly failed to reimburse them for business expenses. Adolph later amended the complaint to add a claim for civil penalties under PAGA for various alleged Labor Code violations.

As part of the Uber Eats sign-up process, Adolph signed an agreement that required him to resolve any disputes arising out of his contractual relationship with Uber in individual arbitration. The agreement contained class, collective, and representative (including PAGA) action waivers, with a severability clause requiring that if the PAGA waiver were...