- posted: Jul. 19, 2023
The United States Supreme Court in Viking River Cruises, Inc. v. Moriana divided PAGA claims into two
buckets: (1) individual PAGA claims; and (2) representative PAGA claims (a claim somewhat akin to a
class action). The U.S. Supreme Court wrote that once the individual claim was compelled to
arbitration, the individual should lose representative standing (e.g., the class-like PAGA claim should be
dismissed). The issue, however, remained open.
That’s where Adolph v. Uber Technologies, Inc. stepped in. In Adolph, the plaintiff alleged that he did
not lose standing to bring a representative PAGA claim after his individual PAGA claim was compelled
to arbitration. The matter made its way to the California Supreme Court.
On July 17 th , the California Supreme Court ruled that “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.”
This means that the current law of the land is representative PAGA claims survive even after
arbitration of individual PAGA claims. The benefit of dismissing the class-like PAGA claim after
successfully compelling arbitration of individual PAGA claims is gone, and California employers cannot
rely on the favorable ruling in Viking River. Look for courts to “stay” (i.e., pause) the representative
PAGA claims until arbitration of the individual PAGA claims conclude.
All hope is not lost. The Court approved a prolonged procedure whereby the representative claim is
stayed, the individual claim is arbitrated, and if the employee is successful in arbitration, then the
employee may proceed in court as an aggrieved employee. If they lose in arbitration, then the Court
reasoned that may be the end of the line.
Look for Uber to appeal the decision to the U.S. Supreme Court. However, the prevailing view is that
chances of the U.S. Supreme Court taking this issue on appeal is low because it recently took up
the Viking River case and the issue at hand is primarily a state issue.
What this means for California Employers: This ruling impacts potential wage-and-hour exposure even
where an arbitration agreement is in place. Revisit your arbitration agreements to ensure they are valid
and enforceable to the extent allowed under the law. To account for Moriana and Adolph, an arbitration
agreement must be governed by the FAA and include language regarding the arbitrability of individual and
non-individual PAGA claims. A valid policy will permit companies to compel arbitration and seek a stay of
any representative claim. Lastly, it is never too late to conduct a wage-and-hour audit to reduce the
chances you will fall prey to a PAGA claim, or if you get hit with one, the damages will be contained.
Garcia & Gurney can help employers comply with wage and hour audits and in reviewing arbitration
agreements. These simple steps can mitigate risk for employers.