The California Court of Appeal for the Second Appellate District recently issued a decision that disagreed with the Supreme Court’s interpretation of the Private Attorneys General Act of 2004 (“PAGA”) in Viking River Cruises, Inc. v. Moriana. PAGA allows employees to sue their employers for Labor Code violations on behalf of themselves and other current or former employees. Viking River held that while California could prohibit pre-dispute arbitration agreements that waived the right to assert “representative” claims under PAGA, the Federal Arbitration Act preempts any rule against requiring employees to arbitrate their “individual” PAGA claims.
Uber asked the Court of Appeal to compel arbitration of the plaintiff’s individual PAGA claims under the agreement and dismiss the non-individual PAGA claims the plaintiff sought to bring on behalf of other drivers. The court agreed that the plaintiff had signed an arbitration agreement requiring him to arbitrate his individual PAGA claims but concluded that PAGA’s standing requirements presented a question of state law as to which Viking River was not binding. The court held that the plaintiff maintained standing to pursue non-individual PAGA claims in court notwithstanding his agreement to arbitrate his individual PAGA claims. The court concluded that the arbitration agreement merely required him to “litigate” the non-individual “portion” of his PAGA claim in an “alternative forum.”
This decision, Gregg v. Uber Technologies, Inc. and a previous decision, Galarsa v. Dolgen California, LLC, have disagreed with Viking River’s interpretation of PAGA’s standing requirements. Both decisions are binding on California trial courts. When a PAGA plaintiff has an arbitration agreement that requires arbitration of their individual PAGA claim, California trial courts will likely not dismiss any representative PAGA claims that are also alleged, as Viking River interpreted California law to require. Instead, trial courts will most likely stay the representative claims pending the individual arbitration.
However, the California Supreme Court has granted review in Adolph v. Uber Technologies to answer the question of whether an employee who has been compelled to arbitrate their individual claims under PAGA maintains statutory standing to pursue representative PAGA claims based on alleged Labor Code violations against other employees. Employers should be careful to craft arbitration agreements that comply with the latest decisions on the interplay between PAGA and the Federal Arbitration Act and regularly review their arbitration agreements with legal counsel.