Recently, in Adolph v. Uber Tech., Inc., the California Supreme Court held that plaintiffs who proceed to arbitration on individual labor code claims do not lose standing to bring representative claims in court under the Private Attorneys General Act of 2004 (PAGA). By ruling as such, the court explicitly rejected the United States Supreme Court’s interpretation of PAGA, given in Viking River Cruises, Inc. v. Moriana. 142 S.Ct. 1906 (2022).
In Adolph, the plaintiff alleged that Uber had misclassified him and other drivers as independent contractors, and that Uber therefore violated California’s Labor Code by failing to reimburse them for necessary business expenses. Accordingly, the plaintiff alleged that he was an “aggrieved employee,” and thus eligible to bring a PAGA claim for civil penalties in addition to his individual and class claims against Uber.
The plaintiff’s agreement with Uber, however, contained an arbitration provision that required him to arbitrate his claims against Uber on an individual basis only. The trial court therefore granted Uber’s motion to compel arbitration of the plaintiff’s individual claims, and simultaneously dismissed his class action claims. As a result of this ruling, the plaintiff filed an amended complaint that eliminated his individual and class claims, leaving only the PAGA claim for civil penalties.
Shortly after the plaintiff filed his amended complaint, though, the United States Supreme Court issued its Viking River opinion, which interpreted PAGA. In that opinion, the court held that where a plaintiff proceeds to arbitration on individual claims, the plaintiff loses standing to bring PAGA claims in court. According to the court, this is because “a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action.” Viking River, 142 S.Ct. at 1925.
California’s Supreme Court, however, expressly rejected this interpretation of PAGA. Noting that it was “not bound by [the U.S. Supreme Court’s] interpretation of California law,” the California court ruled that standing for PAGA claims merely depends on whether an individual is an “aggrieved employee” under the statute. And, according to the statute, there are only two requirements for being considered an “aggrieved employee.” First, the plaintiff must allege he or she was employed by the alleged violator, and second, the plaintiff must allege he or she was someone against whom one or more of the alleged violations was committed.
By focusing entirely on these two requirements, the California Supreme Court rejected the idea that a plaintiff could lose his or her standing as an “aggrieved employee” by means of any post-violation events. Under the court’s interpretation, for example, a plaintiff could not lose his or her status as an “aggrieved employee” even after reaching a settlement with their employer in regards to the plaintiff’s individual claims. In other words, “[t]he remedy for a Labor Code violation, through settlement or other means, is distinct from the fact of the violation itself, and only the latter is required for PAGA standing.” Adolph at 12 (quoting Kim v. Reins International California, Inc., 9 Cal.5th 73, 84 (2020)) (emphasis in original).
Accordingly, the court reasoned that a plaintiff remains an “aggrieved employee” even where the plaintiff proceeds to arbitration on his or her individual claims, and it thus held that plaintiffs in such situations do not lose standing to bring representative PAGA claims in court. Notably, however, the court refused to rule on whether court proceedings featuring such PAGA claims must be stayed pending the arbitration of individual claims, stating only that trial courts “may” decide to order such stays.
California employers should thus redouble their efforts to ensure compliance with California labor laws, as the court’s explicit rejection of Viking River will likely create a resurgence in PAGA claims.
