With its decision in Adolph v. Uber Technologies, Inc. (“Adolph”) the California Supreme Court has reignited the debate surrounding arbitration agreements containing waivers of an employee’s right to bring a representative action under California’s Private Attorneys General Act (“PAGA”). This ruling, which challenges the earlier decision by the U.S. Supreme Court in Viking River Cruises, Inc. v. Moriana (“Viking River Cruises”), marks a significant shift back in favor of employees and their ability to pursue PAGA claims notwithstanding the existence of a written waiver.
Brief Primer on Viking River Cruises and Adolph’s Effect Moving Forward
The U.S. Supreme Court in Viking River Cruises had initially provided a victory for employers. The case addressed whether an employee, bound by an arbitration agreement prohibiting class, collective, or representative PAGA actions, effectively waived their right to pursue PAGA claims on a representative basis. The Supreme Court answered this question in the affirmative, holding that an employee lost standing to pursue a PAGA claim in court once their individual claims had been committed to arbitration. This decision resulted in a win for employers seeking to limit class and representative actions, specifically as it relates to California’s PAGA. However, as discussed in more detail below, the California Supreme Court’s decision in Adolph has called into question the scope and application of the U.S. Supreme Court’s holding in Viking River Cruises.
Brief Factual and Procedural History of Adolph
Adolph involves an Uber Eats delivery driver, Erik Adolph, who filed a class action lawsuit against Uber alleging he and all other delivery drivers were misclassified as independent contractors. Adolph eventually amended his lawsuit to include a cause of action under PAGA, seeking civil penalties for labor code violations on behalf of himself and all current and former “aggrieved employees.” Uber moved to compel arbitration, seeking to compel Adolph to arbitrate his individual claims, and dismiss his class and representative claims.
On appeal, Uber argued, among other things, that Adolph’s representative claims were properly compelled to arbitration pursuant to the holding in Viking River Cruises.
Uber presented several arguments in support of its position. For example, Uber argued that unless the PAGA representative claims were dismissed, Adolph would be permitted to relitigate the issue of whether he was an aggrieved employee under PAGA. Uber also argued that Adolph lacked standing because once his individual claims were determined, he would no longer have a “financial stake” in the outcome of the case. Ultimately, however, the California Supreme Court rejected these and all other of Uber’s arguments against standing.
Although the Court ultimately found against Uberand essentially ignored the holding in Viking River Cruises, the California Supreme Court did implicitly approve the notion that plaintiffs who are compelled to arbitration must still succeed on some portion of their individual claims to maintain standing as an aggrieved employee, which is required in order for them to pursue their non-individual PAGA claims if and when an arbitrator finds as such. The California Supreme Court stated that courts should continue to stay the non-individual claims pursuant to California Code of Civil Procedure section 1281.4 while the employee establishes whether they have standing or not.
Key Takeaways and Strategy Moving Forward
The California Supreme Court’s ruling in Adolph represents a departure from the previous victory for employers in Viking River Cruises. By allowing the PAGA representative action to continue after establishing individual aggrieved employee standing through arbitration, the Court once again confirmed California’s employee-friendly attitude. Indeed, this decision makes clear that Viking River Cruises is not the silver bullet California employers had hoped for and that the best way for California employers to avoid liability under PAGA and other California employment laws is to review their policies and practices to ensure that they are in full compliance with California’s employment laws.