The California Supreme Court just delivered its highly anticipated ruling in Adolph v. Uber Technologies, Inc., affirming that “representative” PAGA claims cannot be compelled to arbitration. While the Court provided clarity on certain issues like the one just stated, open questions still remain. These unresolved matters leave room for further exploration and potential litigation. Below, is a short summary of the key aspects of the ruling and the lingering inquiries that may shape the landscape of representative PAGA claims going forward.
The central question considered by the Court was whether an aggrieved employee, who has been compelled to arbitrate their individual claims under PAGA, maintains the statutory standing to pursue “PAGA claims arising out of events involving other employees” in court. The California Supreme Court unanimously concluded that the employee does indeed retain this standing.
This ruling reaffirms the role of representative PAGA claims in allowing employees to collectively challenge labor violations and seek remedies.
The decision was penned by Justice Liu for the Court and provides a clear interpretation of the requirements for PAGA standing. The Court held that an employee only needs to establish two factors: (1) employment with the violator, and (2) the occurrence of one of more Labor Code violations. The decision further emphasized that PAGA standing “is not affected by the enforcement of an agreement to adjudicate individual claims in another forum.”
The decision also provides a path forward for PAGA cases where the plaintiff’s individual claims are compelled to arbitration. Specifically, the Court states that once an individual claim is compelled to arbitration, the trial court may exercise its discretion to stay the non-individual claims. In such cases, the court would then be bound by the arbitrator’s ruling as to whether the plaintiff has suffered one or more labor code violations, and therefore whether or not the plaintiff has standing to pursue the claim on behalf of others.
Unfortunately, the Adolph decision leaves open several unanswered questions surrounding the preclusive effect of the arbitrator’s decision and whether there is any form of settlement or judgment that can put an employee’s representative PAGA standing to rest. Specifically, it is unclear how conflicting arbitration decisions in multi-plaintiff cases against the same employer will be handled and whether other findings by the arbitrator in the case will also have a preclusive effect on the court, such as a finding that one or more of the employer’s policies is unlawful.