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California Supreme Court:
Employee Who Arbitrates May Still Pursue PAGA Claims
By a MetNews Staff Writer
The California Supreme Court held yesterday that an employee who is contractually obliged to arbitrate any personal employment disputes does not lose standing to maintain a representative action against the employer for civil penalties.
The opinion by Justice Goodwin H. Liu, for a unanimous court, rejects a contrary interpretation of California Labor Code’s Private Attorneys General Act of 2004 (“PAGA”) by the U.S. Supreme Court in its decision last year in Viking River Cruises, Inc. v. Moriana. Liu declared:
“[W]e are not bound by the high court’s interpretation of California law.
“And although the high court’s interpretations may serve as persuasive authority in cases involving a parallel federal constitutional provision or statutory scheme…, Viking River does not interpret any federal provision or statute similar to PAGA.
“Where, as here, a cause of action is based on a state statute, standing is a matter of statutory interpretation.”
Interpreting PAGA—which empowers an individual “aggrieved employee” to bring a representative action for civil penalties, where the state itself declines to act, handing 75 percent of the proceeds to the state and distributing the balance to affected employees—Liu said:
“[W]here a plaintiff has filed a PAGA action comprised of individual and non-individual claims, an order compelling arbitration of individual claims does not strip the plaintiff of standing to litigate non-individual claims in court.”
Alito’s View
In Viking River, U.S. Supreme Court Justice Samuel A. Alito Jr. wrote that under PAGA, only an “aggrieved employee” may maintain a representative action, and if that employee—in the case at hand, Angie Moriana—was shunted into arbitration, that person had no standing as to “non-individual” claims. He expressed this assumption:
“[A]s we see it, PAGA provides no mechanism to enable a court to adjudicate non- individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA’s standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action….When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit….As a result, Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims.”
In a concurring opinion, Justice Sonia Sotomayor observed:
“Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.”
‘Last Word’
Contradicting Alito, Liu said:
“Nothing in PAGA or any other relevant statute suggests that arbitrating individual claims effects a severance. When a case includes arbitrable and nonarbitrable issues, the issues may be adjudicated in different forums while remaining part of the same action.”
In his opinion remanding to Div. Three of the Fourth District Court of Appeal a dispute between Erik Adolph and his former employer, Uber, Liu explained:
“[A] worker becomes an ‘aggrieved employee’ with standing to litigate claims on behalf of fellow employees upon sustaining a Labor Code violation committed by his or her employer….Standing under PAGA is not affected by enforcement of an agreement to adjudicate a plaintiffs individual claim in another forum. Arbitrating a PAGA plaintiffs individual claim does not nullify the fact of the violation or extinguish the plaintiffs status as an aggrieved employee….Adolph’s allegations that Labor Code violations were committed against him while he was employed by Uber suffice to confer standing to bring a PAGA action.”
He added that “[a]n interpretation of the statute that impedes an employee’s ability to prosecute his or her employer’s violations committed against other employees would undermine PAGA’s purpose of augmenting enforcement of the Labor Code.”
Possible Procedure
Uber asserted that if Adolph goes through arbitration and then returns to court to pursue the PAGA claims, he will be relitigating his status as an “aggrieved employee” in contravention of the holding in Viking River that under the Federal Arbitration Act, the actions cannot be divided.
Liu endorsed a procedure suggested by Adolph entailing the action on the PAGA claims being stayed by the trial court; if the arbitrator were to find that Adolph is an “aggrieved employee” and a judgment were entered pursuant to the award, his status would be determined and trial could ensue on the PAGA claims; if he were found not to be an “aggrieved employee,” that would end the matter.
The case is Adolph v. Uber Technologies, 2023 S.O.S. 2507.
Adolph’s contention is that Uber improperly classifies drivers as independent contractors. At the general election in 2020, voters approved Proposition 22—the Protect App-Based Drivers and Services Act—which overrides legislation creating a presumption of employee status, only as to such workers.
The proposition was, for the most part, upheld in March, reversing a Superior Court’s determination that it is unconstitutional. The California Supreme Court is apt to make a final determination on the issue.
Copyright 2023, Metropolitan News Company