Archives for July 19, 2023

As anticipated, earlier this week, the California Supreme Court broke from the U.S. Supreme Court’s Viking River Cruises v. Moriana decision, and further tipped the scales in favor of PAGA plaintiffs in California by holding that PAGA plaintiffs retain standing to litigate representative PAGA claims after the plaintiff’s individual PAGA claims have been ordered to arbitration. The case is Adolph v. Uber (Supreme Court Case No. S274671). The State Supreme Court’s decision continues a trend of cases that chip away at PAGA’s standing requirement, and its implications are significant for California employers.

By way of background, in 2022, the United States Supreme Court held in Viking River that the Federal Arbitration Act (“FAA”) requires enforcement of an agreement to arbitrate a PAGA plaintiff’s claim for civil penalties to the extent the claim is based on alleged violations the plaintiff personally experienced (i.e., arbitration of “individual PAGA claims”). While the High Court upheld the California rule prohibiting the required waiver or arbitration of a PAGA plaintiff’s claim for civil penalties based on alleged violations experienced by others (i.e., the “representative PAGA claim”), the Viking River decision also concluded that the representative PAGA claim must be dismissed once the individual claim is compelled to arbitration. The Court found that a PAGA plaintiff lacks Article III standing to maintain a representative PAGA claim after their individual PAGA claim was sent to arbitration. In Adolph v. Uber, the State Supreme Court rejected that conclusion.

Instead, the California Supreme Court Justices found that an order compelling arbitration of a plaintiff’s individual PAGA claim does not strip them of standing to maintain the representative PAGA claims in court because the claims in arbitration and the claims in court “remain part of the same lawsuit.” The decision further trivializes the PAGA’s standing requirement. In prior decisions, California courts held plaintiffs retain standing to litigate a PAGA claim even after they agreed to settle their individual claims (Kim v. Reins Int’l Cal.) and that PAGA plaintiffs may assert claims for civil penalties based on alleged Labor Code violations they never experienced so long as the plaintiff suffered just one alleged Labor Code violation (Huff v. Securitas Sec. Servs.).