Duane Morris Private Attorneys General Act Review – 2024

“non-individual” claims separately, “California courts, in an appropriate case, will have the last word.” Second, and alternatively, Justice Sotomayor opined that “the California Legislature is free to modify the scope of statutory standing under the PAGA within state and federal constitutional limits.” Id . at 1925-26. On July 20, 2022, the California Supreme Court granted review in Adolph, et al. v. Uber Technologies, Inc ., on the question as to whether an aggrieved employee, who agreed to arbitrate claims under the PAGA that are “premised on Labor Code violations actually sustained by” the aggrieved employee, maintains standing to pursue “PAGA claims arising out of events involving other employees” in court or in any other forum agreed by the parties. In July 2023, the California Supreme Court issued its ruling in Adolph, et al. v. Uber , 14 Cal.5th 1104 (2023). It determined that, once a PAGA plaintiff’s individual claims are compelled to arbitration, the plaintiff retains standing to maintain non-individual, representative PAGA claims in court so long as they are an aggrieved employee. If the plaintiff loses in arbitration, they are not aggrieved and therefore lack standing. However, if the plaintiff prevails or settles their individual claims in arbitration, they can then return to court to prosecute their non-individual PAGA claims. Erik Adolph, an Uber delivery driver, alleged that Uber misclassified him as an independent contractor. Although Adolph initially sought to maintain a class action, those efforts were thwarted by a class action waiver in his workplace arbitration agreement. Adolph then amended his complaint to allege PAGA claims. The trial court denied Uber’s motion to compel arbitration, and the California Court of Appeal affirmed on the basis of California’s prior rule that, under Iskanian v. CLS Transportation , 59 Cal. 4th 348 (2014), the PAGA claims could not be split into individual and non-individual parts and that a PAGA claim was non- arbitrable. In a unanimous decision, the California Supreme Court disagreed with the interpretation of PAGA standing in Viking River. The California Supreme Court held that, so long as an employee alleges they are aggrieved by a violation, they maintain standing under the PAGA. Thus, even after individual PAGA claims are compelled the arbitration, the plaintiff retains standing to pursue non-individual PAGA claims in court. As to litigation logistics, the Supreme Court clarified several things. First, even though individual PAGA claims may be pending in arbitration and non-individual PAGA claims pending in court, the claims all remain in one action, and the court action may be stayed pending completion of arbitration. Second, if the plaintiff loses in arbitration, at that juncture, the plaintiff no longer has standing to maintain non-individual PAGA claims. Third, if the plaintiff prevails in arbitration or settles their individual claims, they continue to possess standing to return to court to pursue non-individual PAGA claims on behalf of others. In the wake of Adolph , the stakes for employers in individual PAGA arbitrations are high. Employers facing PAGA claims should conduct an early assessment of the plaintiff’s individual claims and if unmeritorious aggressively defend the matter because a win in arbitration will extinguish the case in court as well. We also anticipate that PAGA plaintiffs may begin alleging their aggrieved employee status, yet disclaiming any individual relief, in order to bypass arbitration altogether. It remains to be seen if that pleading strategy will be condoned by California courts.

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