What Is the Court's Opinion Regarding the Uber Lawsuit?

Opinion of the Court by Liu, J.

This case concerns a question of standing under the Private Attorneys General Act of 2004 (PAGA). (Lab. Code, § 2698 et seq.; all undesignated statutory references are to this code.)

Informed by findings of pervasive underenforcement of many Labor Code provisions and “a shortage of government resources to pursue enforcement,” the Legislature enacted PAGA to create new civil penalties for Labor Code violations and “ ‘to allow aggrieved employees, acting as private attorneys general, to recover [those] penalties.’ ” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 379 (Iskanian).)

Specifically, PAGA authorizes “an aggrieved employee,” acting as a proxy or agent of the state Labor and Workforce Development Agency (LWDA), to bring a civil action against an employer “on behalf of himself or herself and other current or former employees” to recover civil penalties for Labor Code violations they have sustained. (§ 2699, subd. (a); see Iskanian, at p. 380.)

In Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. __ [142 S.Ct. 1906] (Viking River), the United States Supreme Court considered a predispute employment contract with an arbitration provision specifying that “in any arbitral proceeding, the parties could not bring any dispute as a class, collective, or representative PAGA action.

It also contained a severability clause specifying that if the waiver was found invalid, any class, collective, representative, or PAGA action would presumptively be litigated in court.

But under that severability clause, if any ‘portion’ of the waiver remained valid, it would be ‘enforced in arbitration.’ ” (Id. at p. __ [142 S.Ct. at p. 1916].) In light of our state law rule prohibiting wholesale waiver of PAGA claims (Iskanian, supra, 59 Cal.4th at p. 383), the high court construed the severability clause to reflect the parties’ agreement to arbitrate any alleged Labor Code violations personally sustained by a PAGA plaintiff — so-called “individual” claims — and held that the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) compels enforcement of this agreement.

(Viking River, at pp. – [142 S.Ct. at pp. 1922–1925].) In so holding, the high court declared that the FAA “preempted” a separate state law rule that “PAGA actions cannot be divided into individual and non-individual claims” where the parties have agreed to arbitrate individual claims. (Viking River, at p. __ [142 S.Ct. at p. 1913].)

For consistency, we use the terms “individual” and “non-individual” claims in accordance with the high court’s usage in Viking River.

The question here is whether an aggrieved employee who has been compelled to arbitrate claims under PAGA that are “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 §§ 2698, 2699, subd. (a)) maintains statutory standing to pursue “PAGA claims arising out of events involving other employees” (Viking River, at p. __ [142 S.Ct. at p. 1916]) in court. We hold that the answer is yes. To have PAGA standing, a plaintiff must be an “aggrieved employee” — that is, (1) “someone ‘who was employed by the alleged violator’ ” and (2) “ ‘against whom one or more of the alleged violations was committed.’ ” (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 83, 84 (Kim), quoting § 2699, subd. (c).)

Where a plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.