By Xinying Valerian
On May 9, 2023, the California Supreme Court hears oral arguments in Adolph v. Uber Technologies on the question of “whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee [citations omitted] maintains statutory standing to pursue “PAGA claims arising out of events involving other employees” (Viking River Cruises, at p. [142 S.Ct. at p. 1916]) in court or in any other forum the parties agree is suitable.”
While waiting for the Adolph v. Uber decision, several intermediate appellate courts in California have already answered the standing question with a resounding yes. As we await the Adolph decision, a refresher on the issues at hand is in order.
In June 2022, I posted about Viking River Cruises, Inc. v. Moriana, the first time the U.S. Supreme Court addressed the viability of PAGA representative actions in the face of a mandatory arbitration agreement. The upshot of Moriana’s case, and that of many other cases in the eleven months since the Viking decision, is that a named plaintiff’s “individual PAGA claim” had to be arbitrated, barring other reasons to not enforce an arbitration agreement. Back then, I asked, if the plaintiff’s “individual PAGA claim” had to be arbitrated, what happens with the representative claim that could not be waived through arbitration? That question of state law was the subject of the controversial Part IV of the majority opinion holding that the plaintiff could no longer act as a representative of the State in prosecuting the PAGA representative action. The most notable line came from Justice Sotomayor in concurring with the outcome: “Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.”
California Appellate Developments Galore
Justice Sotomayor’s invitation could not have been less pointed. In response, the California courts have spoken up. In published decisions between February and April, several California courts have held that the representative claims remain alive and pending in court:
- Galarsa v. Dolgen California, LLC (2023) 88 Cal.App.5th 639, as modified on denial of reh’g (Feb. 24, 2023), review granted (May 3, 2023) but the decision remains published and citable;
- Gregg v. Uber Technologies, Inc. (2023) 89 Cal.App.5th 786;
- Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5th 1281; and
- Nickson v. Shemran, Inc. (Cal. Ct. App., Apr. 7, 2023, No. D080914) — Cal.Rptr.3d —-, 2023 WL 2820860.
In the eleven months since Viking River, many trial courts have already reached this conclusion, but now can have a measure of comfort that numerous appellate justices are so far, unanimous in agreement. (How nonindividual PAGA claims will be managed when there is a concurrent individual PAGA arbitration is a whole other matter that is entrusted “to the trial court’s sound discretion.” Nickson, at *8.)
What Did the California Legislature Intend Long Before “Individual PAGA Claims” Were A Thing
Fundamentally, the state courts have been asking themselves whether the California Legislature intended for employees to lose standing to bring PAGA claims if they agree to arbitrate their individual claims. The question is not as meta as my subheading implies, however. I think it’s quite simple: Legislators can’t have contemplated that — after developments in arbitration-related case law that it could not have predicted — the PAGA statute would be interpreted in a way that would defeat the purpose of the statute. That purpose was to allow employee-plaintiffs to prosecute PAGA claims in court as a deputized attorney enforcing the State’s Labor Code. It is not disputable that the Legislature did not explicitly address the present-day scenario where a PAGA action can be split between court and arbitration. There was simply no thought to the possibility that “individual PAGA arbitration” might someday be “a thing.” And there’s no basis in the language or purpose of PAGA to recognize it now as “a thing” that shuts down PAGA enforcement of violations that are not compelled to arbitration.
In enacting PAGA twenty years ago, the Legislature permitted private plaintiffs to bring PAGA claims so long as the plaintiff was “an aggrieved employee” suing “on behalf of himself or herself and other current or former employees.” (Lab. Code, § 2699, subd. (a)). Under the statute, a plaintiff is an aggrieved employee only when “one or more of the alleged violations was committed” against him. (§ 2699, subd. (c).)
In the Adolph v. Uber case now before the California Supreme Court, appellant Uber, the ride-sharing giant – along with numerous organizations representing employers – takes the position that the advent of compelled arbitration of individual PAGA claims means that the plaintiff is whisked off to arbitration and the violations occurring to all other employees cannot be pursued in arbitration or court.
According to Uber’s filing to the California high court, the “aggrieved employee” requirement cannot be met because the plaintiff whose individual PAGA claim has been sent to arbitration “cannot allege any personally sustained violations” in court. (See Appellant’s Opening Brief at 31). And “he will not be seeking in court any PAGA penalties for alleged Labor Code violations that he purportedly experienced.” And that, according to Uber, then places the plaintiff in the same position as any member of the general public. (Appellant’s Opening Brief, at 19-20, 31-32.)
The employee-plaintiff, Adolph, responds that the California Supreme Court (Kim v. Reins Int’l Calif.) already ruled that PAGA imposes only two requirements: “The plaintiff must be an aggrieved employee, that is,  someone ‘who was employed by the alleged violator’ and  ‘against whom one or more of the alleged violations was committed.’” (Kim, 9 Cal.5th at pp. 83–84, quoting § 2699, subd. (c).) It comes as no surprise that several appellate courts did not wait until Adolph to come out with rulings that followed Kim’s clear dictates.
To be clear, the California Supreme Court already settled the question of PAGA statutory standing by identifying the “aggrieved employee” language of section 2699 subdivision (c) as the standing requirement, not the “on behalf of himself or herself and other current or former employees” language in subdivision (a). The Court has made it crystal clear that a plaintiff maintaining an ongoing personal claim in court is not required, since that would add barriers to standing that are not in subdivision (c). (Kim, 9 Cal.5th 73 at 83.)
Importantly, the California Supreme Court stated, the “readily ascertainable facts” demonstrate that “Kim was employed by [defendant] Reins and alleged that he personally suffered at least one Labor Code violation on which the PAGA claim is based.” (Id. at p. 84.) Therefore, the PAGA’s requirements were met because even though Kim was not pursuing any individual Labor Code claim anymore.
So here is a reality check: Can an employee allege that he suffered a Labor Code violation in court even if his individual PAGA claim can only be resolved in arbitration? My answer to that is, why not? Appellant Uber has not brought forth any reason why a plaintiff cannot show up in court to allege and prove a Labor Code violation he experienced, although there is no civil penalty recoverable in court for that violation. The allegation does not disappear just because the redress for it must be had elsewhere. The violation can still be alleged and proven by the employee-plaintiff.
Returning to the stakes posed by Adolph v. Uber: The sum of the employers’ bar’s position today is that the named PAGA plaintiff must allege, prove, and seek civil penalties for the violations personally suffered in the same judicial forum as the violations suffered by other employees, even though the plaintiff may be subject to a predispute arbitration agreement entered into as a condition of employment. The text and purpose of the statute – and Kim v. Reins – do not support such a stringent set of standing requirements. Even if we started the PAGA interpretation exercise from scratch, I cannot find in the statute the standing requirements now posited by the employers’ bar.