California’s Personal Attorneys Common Act of 2004 (“PAGA”) permits staff to behave as an “agent” of the State of California and get well civil penalties for violations of the Labor Code via a civil motion filed on behalf of themselves and different present or former staff. In Viking River Cruises, Inc. v. Moriana, the U.S. Supreme Courtroom held that the Federal Arbitration Act partially preempted a California rule prohibiting employers from requiring their staff to enter into pre-dispute arbitration agreements that contractually waived the best to say “consultant” claims below PAGA. Viking River held that whereas California may validly prohibit pre-dispute arbitration agreements effecting “wholesale waivers” of PAGA claims, the Federal Arbitration Act preempts any rule towards requiring staff to arbitrate their “particular person” PAGA claims.
Viking River additionally held that an worker topic to a legitimate settlement to arbitrate their particular person PAGA claims couldn’t preserve “non-individual” PAGA claims primarily based on alleged Labor Code violations towards different staff. In concurring opinions, nevertheless, a number of Justices indicated that the standing query offered a query of state regulation over which California courts would have the final phrase.
On March 24, 2023, the California Courtroom of Attraction for the Second Appellate District agreed with the concurring opinions in Viking River and gave its personal reply to the PAGA standing query in Gregg v. Uber Applied sciences, Inc.
The Choice in Gregg v. Uber Applied sciences, Inc.
Gregg concerned an Uber driver who claimed that Uber willfully misclassified drivers as unbiased contractors, resulting in the violation of quite a few Labor Code provisions towards him and different drivers. The “Know-how Companies Settlement” the plaintiff signed as a situation of Uber’s smartphone utility to be an Uber driver included an arbitration settlement. With respect to PAGA, the arbitration settlement:
- prohibited non-individual PAGA claims towards Uber in any court docket or arbitration discussion board;
- required drivers to resolve their PAGA claims towards Uber “on a person foundation solely” via binding arbitration; and
- acknowledged that the end result of a person PAGA arbitration couldn’t be used to “resolve whether or not different people have been aggrieved or topic to any violations of regulation.”
Uber requested the Courtroom of Attraction to each (a) compel arbitration of the plaintiff’s particular person PAGA claims below the settlement and (b) dismiss the non-individual PAGA claims the plaintiff sought to deliver on behalf of different drivers. Based mostly on Viking River, Uber argued that the settlement to arbitrate the “particular person” PAGA claims disadvantaged the plaintiff of standing to deliver PAGA claims on behalf of different drivers.
The Courtroom of Attraction agreed that the plaintiff had signed an arbitration settlement, that below Viking River’s evaluation of the Federal Arbitration Act, required him to arbitrate his particular person PAGA claims. Nevertheless, the Courtroom of Attraction concluded that PAGA’s standing necessities offered a query of state regulation as to which Viking River was not binding.
Analyzing the PAGA standing query for itself, the Courtroom of Attraction disagreed with Viking River’s evaluation and held that the Gregg plaintiff maintained standing to pursue non-individual PAGA claims in court docket however his settlement to arbitrate his particular person PAGA claims. The Courtroom concluded the arbitration settlement merely required him to “litigate” the non-individual “portion” of his PAGA declare in an “different discussion board.”
Due to this, the Courtroom of Attraction concluded that parts of the arbitration settlement purporting to require the Gregg plaintiff to “waive” his proper to invoke “consultant” standing to get well penalties primarily based on violations towards different staff effected have been invalid below California regulation. The Courtroom severed these provisions from the arbitration settlement.
Gregg marks the second California Courtroom of Attraction choice to disagree with Viking River’s interpretation of PAGA’s standing necessities. As we shared in a earlier publish, California’s Fifth Appellate District’s latest choice in Galarsa v. Dolgen California, LLC additionally held that an settlement to arbitrate an worker’s particular person PAGA claims doesn’t deprive the worker of standing to later pursue consultant PAGA claims.
Each Gregg and Galarsa are printed choices which might be binding on California trial courts. In consequence, when a PAGA plaintiff has an arbitration settlement that requires arbitration of their particular person PAGA declare, California trial courts will doubtless not dismiss any consultant PAGA claims which might be additionally alleged, as Viking River interpreted California regulation to require. As a substitute, trial courts will most certainly keep the consultant claims pending the person arbitration.
Nevertheless, Gregg and Galarsa is not going to be the ultimate phrase on whether or not an worker who has been compelled to arbitrate their particular person claims below PAGA maintains statutory standing to pursue consultant PAGA claims primarily based on alleged Labor Code violations towards different staff. The California Supreme Courtroom has granted evaluate in Adolph v. Uber Applied sciences to reply the exact same query. Adolph is absolutely briefed, however oral argument has not but occurred.
Pending Adolph, employers ought to be cautious to craft arbitration agreements that adjust to the most recent choices on the interaction between PAGA and the Federal Arbitration Act, whereas additionally permitting for the likelihood that Adolph would possibly agree with Viking River’s evaluation of this subject. Due to the advanced and continually evolving case regulation surrounding the arbitration of PAGA claims—and the enforcement of arbitration agreements generally—employers are strongly inspired to recurrently evaluate their arbitration agreements with authorized counsel.