Adolph v. Uber Techs., Inc., 14 Cal. 5th 1104 (2023)

After months of anticipation, the California Supreme Court answered “yes” to the critical question of whether “aggrieved” PAGA plaintiffs retain their standing to pursue representative claims in court after their individual claims have been compelled to arbitration.

Erik Adolph worked as a driver for Uber, delivering food to customers through Uber’s online platform.  As a condition of his employment, Adolph had to accept a technology services agreement that contained an arbitration provision.  The arbitration agreement required Adolph to arbitrate, on an individual basis, work-related claims he might have against Uber. The arbitration agreement also included a provision that purported to waive Adolph’s ability to bring PAGA claims on behalf of others, either in court or through arbitration.

Adolph sued Uber, claiming that the company misclassified him and other drivers as independent contractors, rather than employees.  Uber moved to compel arbitration of Adolph’s individual claims, which the trial court granted; the trial court subsequently dismissed Adolph’s class action claims that were pending in court.  However, with the court’s permission, Adolph amended his complaint to eliminate his individual claims and include only a PAGA claim for civil penalties and filed a motion for preliminary injunction to prevent arbitration from proceeding.  The trial court then granted the injunction.  Uber appealed the injunction order and attempted to compel arbitration again, but an appellate court affirmed the trial court’s decision.  Uber appealed that decision as well.

The California Supreme Court concluded in this opinion that PAGA plaintiffs do not lose their standing to pursue a non-individual claim when their individual claims are compelled to arbitration.  The Court reasoned that denying a PAGA plaintiff standing to pursue the non-individual PAGA claims was inconsistent with PAGA’s purpose, because it would undermine the State’s ability to deputize individuals to enforce the Labor Code, reduce state revenues and increase state costs of enforcement.  The Supreme Court further held that a trial court may stay the representative civil action pending arbitration, and following arbitration, the award may be confirmed in court, which would bind the parties in the pending court action.  See also Barrera v. Apple Am. Grp. LLC, 2023 WL 5620678 (Cal. Ct. App. 2023).