Erik Adolph, was a driver for UberEATS, a meal delivery service. The company through which drivers are connected with those in need of UberEATS’ services is owned by Uber Technologies Inc.

Before he began making deliveries for UberEATS in March 2019, Adolph created an account to use the UberEATS app. In creating his account, Adolph accepted an arbitration agreement, which “is governed by the Federal Arbitration Act.”

In October 2019, Adolph filed a putative class action complaint against Uber, claiming that Uber had misclassified employees as independent contractors, and had therefore failed to reimburse the class members for necessary work expenses. The complaint was amended to include only a California Private Attorney General Act (PAGA) cause of action. Uber filed a petition to compel arbitration of Adolph’s individual claims, strike the class action allegations, and stay all court proceedings.

But the trial court denied Uber’s petition to compel arbitration citing California Supreme Court’s 2014 decision in Iskanian v. CLS Transportation Los Angeles, LLC 59 Cal.4th 348, 384 and the cases following it, In Iskanian the California Supreme Court held “that an employee’s right to bring a PAGA action is unwaivable,” and that “here . . . an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.”

Uber appealed the ruling of the trial court. On April 11, 2022 the Court of Appeal affirmed the trial court in the case of Adolph v Uber Technologies Inc. -G059860 (consol. w/ G060198). The case was unremarkable at the time, hence it was “unpublished.”

About two months later, The Supreme Court of the United States published its decision in Viking River Cruises, Inc. v. Angie Moriana, on June 15, 2022, agreeing with the employer who had appealed nearly the same issue as in Adolph v Uber. SCOTUS thus limited the application of Iskanian in California. It said “When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.” As a result, Moriana would lack statutory standing to maintain her non-individual claims in court, and the correct course was to dismiss her remaining claims.

The U.S. Supreme Court decision in Viking had – at least temporarily – disrupted the PAGA process against employer’s who have arbitration agreements in California. Hence, on July 22, 2022 the California Supreme Court granted Uber’s Petition for Review in the Adolph case. The Uber case which was unremarkable and unpublished, is now remarkable, since the timing make it the case chosen to decide how Viking will work in California.

The California Supreme Court agreed to hear Adolph v Uber Technologies Inc in order to consider whether an aggrieved employee who has been compelled to arbitrate individual claims “premised on Labor Code violations actually sustained by” the plaintiff (Viking River, supra, 596 U.S. at p. __ [142 S.Ct. at p. 1916]; see Lab. Code, § 2699, subd. (a)) maintains statutory standing to pursue non-individual “PAGA claims arising out of events involving other employees” (Viking River, at p. __ [142 S.Ct. at p. 1916]) in court.

In deciding Viking River the U.S. Supreme Court concluded that a PAGA plaintiff loses standing in this situation: “[A]s we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA’s standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action.”

And SCOTUS reasoned that “When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.”

Nonetheless, the California Supreme Court in it’s Adolph v Uber Technologies -S274671 (July 2023) decision published today, disagreed with the Viking River interpretation of PAGA, a state law, because “[t]he highest court of each State . . . remains ‘the final arbiter of what is state law’ ” (Montana v. Wyoming (2011) 563 U.S. 368, 378, fn. 5), “we are not bound by the high court’s interpretation of California law.”

The centerpiece of PAGA’s enforcement scheme is the ability of a plaintiff employee to prosecute numerous Labor Code violations committed by an employer and to seek civil penalties corresponding to those violations.

“Uber makes several arguments in urging that a PAGA plaintiff loses standing to litigate non-individual claims in court when the plaintiff’s individual claims are subject to arbitration. None is persuasive.”

In sum, where a plaintiff has filed a PAGA action comprised of individual and non-individual claims, an order compelling arbitration of individual claims does not strip the plaintiff of standing to litigate non-individual claims in court. This “is the interpretation of PAGA that best effectuates the statute’s purpose, which is ‘to ensure effective code enforcement.’ ”  

“We reverse the judgment of the Court of Appeal and remand the case for further proceedings consistent with this opinion. We limited our review to the question of PAGA standing and express no view on the parties’ arguments regarding the proper interpretation of the arbitration agreement.”