The Court of Appeal: Which Way Are They Leaning in the Uber Lawsuit?

B.

Five recent Court of Appeal opinions have reached the same conclusion. (Galarsa v. Dolgen California, LLC (2023) 88 Cal.App.5th 639, 653 (Galarsa) [“[A] plaintiff’s PAGA standing does not evaporate when an employer chooses to enforce an arbitration agreement.”]; Seifu, supra, 89 Cal.App.5th at p. 1134 [“[A] plaintiff is not stripped of standing to pursue nonindividual PAGA claims simply because his or her individual PAGA claim is compelled to arbitration.”]; Piplack, supra, 88 Cal.App.5th at p. 1291 [“[P]aring away the plaintiff’s individual claims does not deprive the plaintiff of standing to pursue representative claims under PAGA . . . .”]; Gregg, supra, 89 Cal.App.5th at p. 792 [“[U]nder California law, Gregg is not stripped of standing to pursue his nonindividual claims in court simply because his individual claim must be arbitrated.”]; Nickson, supra, 90 Cal.App.5th at pp. 134–135 [“Nickson has standing to litigate nonindividual PAGA claims in the superior court notwithstanding his agreement to arbitrate individual PAGA claims.”].)

This unanimity is unsurprising because our reading of PAGA’s standing requirements not only follows from the statute’s text but also aligns with its purpose and legislative history.

“The Legislature’s sole purpose in enacting PAGA was ‘to augment the limited enforcement capability of the [LWDA] by empowering employees to enforce the Labor Code as representatives of the Agency.’ ” (Kim, supra, 9 Cal.5th at p. 86, quoting Iskanian, supra, 59 Cal.4th at p. 383.) To this end, “the Legislature conferred fairly broad standing on all plaintiffs who were employed by the violator and subjected to at least one alleged violation.” (Kim, at p. 91.)

A narrower construction of PAGA standing would “thwart the Legislature’s clear intent to deputize employees to pursue sanctions on the state’s behalf.” (Kim, at p. 91; see Williams v. Superior Court (2017) 3 Cal.5th 531, 548 [“Hurdles that impede the effective prosecution of representative PAGA actions undermine the Legislature’s objectives.”]; Galarsa, supra, 88 Cal.App.5th at p. 653 [“Revoking an employee’s standing as to [non-individual] claims would ‘severely curtail[] PAGA’s availability to police Labor Code violations.’

[(Kim, at p. 91.)]”]; see also Kim, at p. 83 [“Considering the remedial nature of legislation meant to protect employees, we construe PAGA’s provisions broadly, in favor of this protection.”].)

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. (Iskanian, supra, 59 Cal.4th at p. 384; Assembly Judiciary Committee Analysis, supra, at p. 4.)

The Legislature enacted PAGA on the premise that Labor Code violations sustained by the plaintiff employee are often only a fraction of the violations committed by an employer that is engaged in unlawful workplace practices. (Iskanian, at p. 384.)

As we explained in Kim, “PAGA standing is not inextricably linked to the plaintiff’s own injury. Employees who were subjected to at least one unlawful practice have standing to serve as PAGA representatives even if they did not personally experience each and every alleged violation. (§ 2699(c).)

This expansive approach to standing serves the state’s interest in vigorous enforcement.” (Kim, supra, 9 Cal.5th at p. 85.) An interpretation of the statute that impedes an employee’s ability to prosecute his or her employer’s violations committed against other employees would undermine PAGA’s purpose of augmenting enforcement of the Labor Code. (Kim, at p. 86.)

In enacting PAGA, the Legislature also expressed an intent to remedy the LWDA’s long-standing funding deficiencies. (See, e.g., Assembly Judiciary Committee Analysis, supra, at p. 4 [“ ‘SB 796 helps generate revenues to the state at a time when we need them.’ ”].)

Seventy-five percent of civil penalties recovered in PAGA actions are statutorily allocated to the state to help fund the LWDA in carrying out its regulatory responsibilities related to covered employers, without passing those costs on to taxpayers or diverting funds from other priorities. (§ 2699, subd. (i).) Narrowing PAGA standing in the manner Uber urges would likely reduce state revenues and increase state costs of enforcement.

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.’ ” (Galarsa, supra, 88 Cal.App.5th at p. 654, quoting Kim, supra, 9 Cal.5th at p. 87.)