On May 10, 2023, the California Supreme Court heard oral argument in Adolph v. Uber Technologies, Inc., a closely watched case that will decide whether a Private Attorneys General Act (PAGA) plaintiff loses standing to pursue a representative claim when their individual PAGA claim is compelled to arbitration.
Observers hoping for a sign that the court was inclined to rule for the employer may have come away disappointed, as the justices mostly kept their cards close to their vests. (One of the few highlights was Chief Justice Guerrero’s pointed questions about how the plaintiff’s interpretation of “aggrieved employee” could be harmonized with other sections of the statute—an argument we previewed here.)
However, Adolph made two notable concessions during argument that could take two of the worst-case scenarios for employers off the table.
First, Adolph conceded that if a plaintiff loses on the merits in individual arbitration—that is, the arbitrator finds the plaintiff is not an aggrieved employee—the arbitrator’s finding would preclude the plaintiff’s representative claim once confirmed in court. Conflicting decisions from the Court of Appeals regarding the preclusive effect of an arbitration award in PAGA cases raised the specter of a plaintiff losing in individual arbitration, then pursuing a representative claim in court as if the arbitration never happened. Adolph did not attempt to argue that the Supreme Court should endorse such an outcome.
Second, Adolph acknowledged that, except in unusual cases, a plaintiff’s non-individual PAGA claims should be stayed pending the arbitration of their individual PAGA claims. A recent string of Court of Appeal decisions on the standing issue was mostly silent on whether the court action should be stayed when a PAGA plaintiff’s individual claims are compelled to arbitration.
If the Supreme Court rules for Adolph and allows plaintiffs to pursue non-individual PAGA claims in court even after being compelled to arbitration, it would be well-advised to incorporate Adolph’s concessions into its decision. When an employee has agreed to bring all employment-related claims in individual arbitration, at a minimum the employer should be able to expect the employee to pursue individual arbitration first, and for the case to be over if the employee loses in that forum. Thus, employers can hold out hope that even a bad outcome in Adolph will come with some reasonable guardrails.