By Jake Keller
In July, the California Supreme Court decided a long-awaited case involving Uber in a way that will present new challenges for employers. The case involves yet another issue related to application of California’s Private Attorney General Act, which gives rise to problematic “PAGA” claims. PAGA claims have similarities to class actions in that a plaintiff pursues claims on an individual basis as well as on a representative basis for “similarly aggrieved” employees. Specifically, with this new decision, the Supreme Court held in Adolph v. Uber Technologies, Inc. that plaintiffs with PAGA claims retain standing to litigate representative PAGA claims even after the plaintiff’s individual PAGA claims have been ordered to private arbitration. This decision comes in the wake of the United States Supreme Court’s 2022 decision in Viking River Cruises, Inc. v. Moriana in which that Court ruled that after a plaintiff is ordered to private arbitration, the plaintiff thereafter lacks standing to pursue representative PAGA claims in court. Viking River was a decidedly pro-employer decision. Adolph will in effect reverse some of the pro-employer benefits of Viking River.
In Viking River, the United States Supreme Court held that a representative PAGA claim must be dismissed after an individual plaintiff is compelled to arbitration because, the Court reasoned, a PAGA plaintiff lacks standing to maintain a representative PAGA claim after their individual PAGA claim goes to arbitration. No more. Now, an order compelling arbitration does not eliminate a plaintiff’s standing to maintain the representative PAGA claims.
What does this mean for California employers in the construction industry? While this decision is complex and, as always, leaves some questions unanswered, the key takeaway is that a trial court’s decision to order an employee’s individual claims to arbitration will no longer automatically end a PAGA action. Instead, going forward, representative PAGA claims will most likely be stayed by trial court judges pending the outcome of such individual arbitrations. While a disappointment to the California business community, the new decision is not surprising. Viking River left the door open to this interpretation by the California Supreme Court. And business owners remain well-advised to require employees to sign arbitration agreements as part of their employment.
Jake Keller is a law clerk with Dunn DeSantis Walt & Kendrick. Jake is a J.D. Candidate at the University of San Diego School of Law. He graduated from the University of California, Berkeley, with a degree in Political Economy with a concentration in Law and Economics. Upon graduating law school and passing the bar, Jake plans to practice business and corporate law.
Dunn DeSantis Walt & Kendrick provides a broad spectrum of legal services to businesses of all sizes, from small, local start-ups and non-profits to large, national companies. DDWK’s real estate development and construction practice includes representing all segments of the development and construction industries on both private and public projects.
You can find additional information and resources related to helping business owners and their businesses on the DDWK website.
