Last term, the United States Supreme Court issued its decision in Viking River Cruises, holding that the Federal Arbitration Act preempts California law prohibiting the arbitration of claims brought under the Private Attorneys General Act of 2004 (“PAGA”). In Viking River, the Supreme Court reasoned that while a plaintiff employee’s representative PAGA claims (that is, claims based on alleged Labor Code violations suffered by other employees) may not be compelled to arbitration, his or her individual PAGA claims (i.e., claims based on alleged Labor Code violations actually suffered by the plaintiff) may be so compelled. Addressing the question of what happens to the representative component of a PAGA claim when the individual PAGA claim is compelled to arbitration, the Supreme Court majority concluded that “[w]hen an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.” Thus, in the Supreme Court majority’s view, an employee whose individual PAGA claim has been compelled to arbitration loses standing to raise representative PAGA claims in court.
However, the Supreme Court’s analysis of standing requirements for representative PAGA claims has been met with resistance by California appellate courts. Following the issuance of Viking River, a trio of opinions out of the Second, Fourth, and Fifth Appellate Districts have reached the conclusion that, while an employee’s individual PAGA claims may be compelled to arbitration under Viking River, the employee nonetheless retains standing to bring representative PAGA claims in court. In Galarsa v. Dolgen California, LLC, the Fifth Appellate District acknowledged that the California Supreme Court has “yet to decide the question” of PAGA standing, but nonetheless determined that an employee who must arbitrate his or her individual PAGA claims still retains standing to pursue representative PAGA claims in court. In Piplack v. In-N-Out Burgers, the Fourth Appellate Court, while observing the “deep deference” that must be afforded Supreme Court opinions, followed Galarsa. And most recently, on March 24, 2023, the Second Appellate District in Gregg v. Uber Technologies similarly determined that a plaintiff “is not stripped of standing to pursue his non-individual claims in court simply because his individual claim must be arbitrated.”
So where does this leave things? The California Supreme Court has taken up the issue of PAGA standing in Adolph v. Uber Technologies, in which the court will decide the question of “[w]hether an aggrieved employee who has been compelled to arbitrate claims under [PAGA] that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee . . . maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ . . . in court[.]” But until the California Supreme Court weighs in, employers should be aware of the current trend amongst the appellate courts: while there is no dispute that an employee’s individual PAGA claims may be compelled to arbitration pursuant to an appropriate arbitration provision, the courts have signaled their reluctance to follow Supreme Court guidance on PAGA standing. We look forward to learning more from the Adolph decision.
If you have any questions about the enforceability of your arbitration agreement, or if you think that your company would benefit from utilizing arbitration agreements, please feel free to contact us
******Update to Original Blog*******
On July 17, 2023, the California Supreme Court issued its ruling in Adolph v. Uber Technologies, Inc. (2022) 142 S.Ct. 1906. As expected, the Adolph Court confirmed that, contrary to the United States Supreme Court’s reasoning in Viking River, “[w]here a plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing . . . to litigate claims on behalf of other employees under PAGA.” Accordingly, even though a plaintiff’s individual PAGA claims may now be compelled to arbitration, his or her representative PAGA claims may potentially continue in court, although such representative claims may be stayed given the requirement that a PAGA plaintiff must show injury under the California Labor Code.