This post first appeared on the Securities Arbitration Alert blog.  The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.

The California Supreme Court has ruled unanimously that, even though a California Private Attorney General Act (“PAGA”) Plaintiff’s individual claims have been referred to arbitration, they have standing to assert representative claims.

We reported in SAA 2022-30 (Aug. 4) that the California Supreme Court in July 2022 agreed to review the appellate court holding in Adolph v. Uber Technologies, Inc., No. G059860 (Calif. Ct. App. 4  2022), a case we covered in the “Quick Takes” section of SAA 2022-15 (Apr. 21). The Adolph Court had held:

“Uber contends on appeal that the initial question of whether Adolph is an employee—who may bring a representative PAGA [California’s Private Attorney General Act] claim—or an independent contractor—who may not—must be determined in arbitration. We disagree. California case law is clear that the threshold issue of whether a plaintiff is an aggrieved employee in a PAGA case is not subject to arbitration.”

We later reported in SAA 223-24 (Jun. 22) that oral argument took place May 9 and can be viewed here.

California Supreme Court: Representative PAGA Claims May Be Asserted

As our readers know, the United States Supreme Court in June 2022 held 8-1 in Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906, that PAGA was in part preempted by the Federal Arbitration Act, insofar as PAGA allowed employees to evade bilateral predispute arbitration agreements. The unanimous holding in Adolph v. Uber Technologies, Inc., No. S274671 (Calif. Jul. 17, 2023), describes the core issue as follows:

“[W]hether an aggrieved employee who has been compelled to arbitrate claims under PAGA that are ‘premised on Labor Code violations actually sustained by’ the plaintiff (Viking River, supra, 596 U.S. at p. __ [142 S.Ct. at p. 1916]; see §§ 2698, 2699, subd. (a)) maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ (Viking River, at p. __ [142 S.Ct. at p. 1916]) in court.”

And the holding?

“We hold that the answer is yes. To have PAGA standing, a plaintiff must be an ‘aggrieved employee’ — that is, (1) ‘someone ‘who was employed by the alleged violator’ and (2) ‘against whom one or more of the alleged violations was committed.’ 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…. In sum, where 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.”

(ed: *Our take is that this one is headed to SCOTUS. **An Alert h/t to Editorial Board member Peter R. Boutin, Esq., of Keesal, Young & Logan, for alerting us to this decision.)