Despite SCOTUS’s Viking Arbitration Ruling, California Permits PAGA Standing for Some Claims

In a decision on an independent contractor classification case against San Francisco-based Uber Technologies Inc., the California Supreme Court held Monday that non-individual claims under California’s Private Attorneys General Act, best known as PAGA, can maintain statutory standing in court when individual claims are sent to arbitration.

The decision departed from the U.S. Supreme Court’s ruling in Viking River Cruises Inc. v. Moriana, 596 U.S. ___ (2022), that a worker's individual PAGA claims could go to arbitration and her nonindividual claims could be dismissed for lack of standing in court. [CPR Speaks background on Viking, including a YouTube discussion, can be found here, with coverage of the decision here.]

PAGA authorizes aggrieved employees to file suits to recover civil penalties on behalf of themselves, other employees, and the state of California for labor law violations. Adolph v. Uber Technologies, No. S274671 (Cal. S.Ct. July 17, 2023), was initially brought by Uber Eats delivery driver Erik Adolph in 2019, alleging individual and class claims arising out of his classification as an independent contractor.

In April 2022, a state appeals court upheld a lower court's denial of Uber's arbitration bid. The company filed a petition to the state Supreme Court the next month, and the Court agreed to hear the case in July 2022, after the Viking decision was made.

In its decision this week, California’s top Court backed the original plaintiff, holding that arbitration doesn’t mean the individual loses his or her PAGA standing. “Where 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 as an aggrieved employee to litigate claims on behalf of other employees under PAGA,” Justice Goodwin Liu wrote in the 7-0 opinion for the Court.

The justices also acknowledged their departure from the U.S. Supreme Court’s Viking ruling, citing Justice Sonia Sotomayor's concurring opinion that "if this Court's understanding of state law is wrong, California courts, in an appropriate case, will have the last word.”

The California Court’s departure from Viking on Monday was not a surprise. Since Viking, California appellate courts have, in five different published opinions noted in the Adolph decision, allowed the non-individual claims to remain in court, although one said litigation of the non-individual claims should be stayed pending arbitration.

The state justices focused only on the PAGA standing issue, so the case is now set to return to a lower appeals court regarding other issues. Uber’s attorney said in an email to Bloomberg Law Monday that the California Supreme Court’s decision “violates the Federal Arbitration Act, [and] undermines the legislature’s intent in enacting PAGA,” and that Uber is considering appellate options. Joyce E. Cutler, “California High Court Rejects Arbitrating Group PAGA Claims,” Bloomberg Law (July 17) (available here).

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The author, a 2023 CPR Summer Intern, is a student at Boston College Law School in Newton Centre, Mass.

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