California court partly grants Uber’s motion to compel arbitration of PAGA claim
A complaint filed under the Private Attorneys General Act of 2004 (PAGA) alleged that Uber wrongly and wilfully classified employees as independent contractors, which led to violations of California Wage Order 9-2001 and other provisions of California’s Labor Code.
The plaintiff in the case of Gregg v. Uber Technologies, Inc. et al. wanted to become a driver for Uber Technologies, Inc. and RasierCA, LLC. He signed up to use Uber’s smartphone application, accepted the technology services agreement, and did not opt out of the agreement’s arbitration provision.
The arbitration provision required drivers to resolve through arbitration any disputes arising out of or related to their relationship with Uber and disputes about wage and hour laws, breaks, rest periods, compensation, and termination. The arbitration provision did not apply to a representative action brought on behalf of others under the PAGA, to the extent that a court deemed the waiver of such a claim unenforceable.
In August 2018, the plaintiff filed a PAGA complaint seeking civil penalties from Uber on behalf of himself and other current and former employees.
Uber filed a motion to compel arbitration based on the technology services agreement’s arbitration provision. Uber wanted to enforce the PAGA waiver by requiring the plaintiff to arbitrate his individual claim and by dismissing or striking his non-individual PAGA claims.
In December 2019, the trial court denied Uber’s motion upon finding the PAGA waiver unenforceable. In April 2021, the California Court of Appeal affirmed the trial court’s decision based on the ruling in the case of Iskanian v. CLS Transportation Los Angeles, LLC (2014).
In June 2022, the U.S. Supreme Court ruled in Uber’s favor and returned the case to the appellate court so that it could take into account the recent ruling in Viking River Cruises, Inc. v. Moriana (2022).
Individual claim to be arbitrated
The California Court of Appeal for the Second District partly affirmed and partly reversed the trial court’s decision denying Uber’s motion to compel arbitration. It ordered the trial court to compel the plaintiff to arbitrate his individual PAGA claim and to put on pause non-individual PAGA claims pending completion of the arbitration.
First, the appellate court decided that the PAGA waiver was invalid and should be severed from the arbitration provision. The Iskanian ruling prevented parties from waiving their representative standing to bring PAGA claims in a judicial or arbitral forum. The Viking River decision upheld Iskanian, the appellate court noted.
Second, the appellate court determined that the plaintiff should arbitrate his individual PAGA claim, which asked for civil penalties based on alleged Labor Code violations, in light of the arbitration provision. However, his non-individual PAGA claims were not subject to arbitration and were instead subject to court litigation, the appellate court said.
Lastly, the appellate court ruled that the plaintiff still had the standing to pursue the non-individual PAGA claims through court litigation even though he was required to arbitrate his individual PAGA claim. But the litigation of the non-individual PAGA claims should be put on pause until the arbitration of his individual PAGA claim was done, the appellate court said.