Duane Morris Private Attorneys General Act Review – 2024

The Court of Appeal’s decision in Gregg, et al. v. Uber Technologies, Inc ., 89 Cal.App.5th 786 (Cal. App. 2023), highlights the kind of language an employer might utilize in an arbitration agreement to ensure that individual PAGA claims are resolved in arbitration and non-individual PAGA claims are stayed in the interim. Gregg, an Uber driver, filed a PAGA action against Uber, alleging that he and others drivers were misclassified as independent contractors. Uber sought to compel Gregg’s individual PAGA claims to arbitration based on an arbitration provision in the Technology Services Agreement (TSA) that Gregg executed. Although the trial court denied the motion, the U.S. Supreme Court’s decision in Viking River (issued during pendency of the appeal) furnished the basis for the Court of Appeal’s reversal. The language of the arbitration clause proved critical. The TSA contained a waiver of the right “to bring a representative claim on behalf of others” and a severance clause whereby if “any provision of the PAGA Waiver is found to be unenforceable [then] any representative action brought under PAGA on behalf of others must be litigated in a civil court.” Id . at 795. Although Gregg argued the TSA effected a wholesale waiver of the right to bring any PAGA claims, and that both his individual and non-individual PAGA claims had to be litigated in court, the Court of Appeal explained that the TSA’s use of the phrase “on behalf of others” signified an intent to have the waiver apply only to the non-individual PAGA claims. Id . at 798. Thus, the Court of Appeal severed the unenforceable waiver language, and ordered Gregg’s individual PAGA claims to arbitration. It also stayed the non-individual PAGA claims because the arbitration provision expressly provided for such a stay. It provided, “[t]o the extent that there are any claims to be litigated in a civil court of competent jurisdiction because a civil court of competent jurisdiction determines that the PAGA Waiver is unenforceable with respect to those claims, the Parties agree that litigation of those claims shall be stayed pending the outcome of any individual claims in arbitration.” Id . at 799. Adding similar language to an arbitration agreement would certainly help secure a stay of non-individual PAGA claims pending individual arbitration and is a good practice. In Ahlmann, et al. v. Forwardline Financial, LLC , 2023 Cal. App. Unpub. LEXIS 4454 (Cal. App. July 31, 2023), the Court of Appeal considered whether individual PAGA claims should be compelled to arbitration where the arbitration agreement failed to include a severability clause or express reference to the FAA. The arbitration agreement at issue was mandatory for employees to sign. It provided that arbitration would be pursued “solely in an individual capacity, and not as a representative or class member in any purported class or representative proceeding” and that the arbitrator could not consolidate claims or preside over “any form of class or representative proceeding.” Id . at *1-2. The plaintiff argued that Viking River did not apply because the arbitration agreement nowhere referenced the FAA and instead indicated that arbitration would be “pursuant to the laws of the State of California.” Id . at *3-4. The Court of Appeal held that the latter language was in reference to the law that would apply in arbitration and did not foreclose the FAA’s application to the agreement . For the FAA to not apply, there needed to be language in the arbitration agreement making an intent to apply state law to the agreement “unmistakably clear.” Id . at *18. The plaintiff in Ahlmann further argued that, even if the FAA applied, unlike in Viking River , his arbitration agreement did not contain a severability clause. Thus, the presence of any unlawful clause in the agreement should void the agreement. The Court of Appeal held this did not matter because § 1599 of the California Civil Code supplied the severability language that was absent in the agreement. Section 1599 provides that a contract is void as to unlawful parts and valid as to the rest. Applying that code section, the Court of Appeal construed the phrase “representative proceeding” in the agreement to encompass only the plaintiff’s non-individual PAGA claims, and reversed the trial court’s order denying the employer’s motion to compel the individual PAGA claims to arbitration. Id . at *24. In Quintero, et al. v. Apria Healthcare LLC , 2023 Cal. App. Unpub. LEXIS 3902 (Cal. App. July 5, 2023), the plaintiff worked as a courier for a company called Spoke that contracted with Apria, a home respiratory services and equipment company. Apria also employed couriers, but used Spoke’s couriers as well. In connection with his employment with Spoke, the plaintiff signed an arbitration agreement. Apria was not a party nor mentioned in the agreement. In November 2020, the plaintiff filed a putative wage and hour class action, which he later amended to include PAGA claims against Apria. At the outset of the case, the trial court asked the parties if a motion to compel arbitration was contemplated. Apria advised the trial court that it was aware of the existence of an arbitration agreement between the plaintiff and Spoke, but it did not

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