The Relationship Between Uber and Its Drivers

B.

Next, Uber contends that bifurcating individual and nonindividual components of a PAGA claim into arbitration and court proceedings has the effect of severing the two components into separate and distinct actions, and each of the resulting two actions must independently satisfy PAGA’s standing requirements.

Because the plaintiff’s standalone action for nonindividual claims no longer seeks penalties for Labor Code violations sustained by the plaintiff, Uber says, the plaintiff cannot satisfy PAGA’s standing requirements.

In urging this view, Uber relies on cases interpreting a long-superseded statute, the pre-1971 version of section 1048 of the Code of Civil Procedure, which provided that “[a]n action may be severed . . . in the discretion of the court, whenever it can be done without prejudice to a substantial right.”

Uber does not explain why pursuing some remedies in arbitration and others in court requires the PAGA action to be treated like an action severed under that statute. Moreover, because former section 1048 does not authorize severance that would result in “prejudice to a substantial right,” it is doubtful the statute would apply here.

Nothing in PAGA or any other relevant statute suggests that arbitrating individual claims effects a severance. When a case includes arbitrable and nonarbitrable issues, the issues may be adjudicated in different forums while remaining part of the same action.

Code of Civil Procedure section 1281.4 states that upon “order[ing] arbitration of a controversy which is an issue involved in an action,” the court should “stay the action.”

It further provides that “[i]f the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only.” Section 1281.4 does not contemplate that the compelled arbitration of an issue in controversy in the action is a separate action.

The statute makes clear that the cause remains one action, parts of which may be stayed pending completion of the arbitration. (See Cuevas v. Truline Corp. (2004) 118 Cal.App.4th 56, 61 [citing Code Civ. Proc., § 1281.4 in holding that plaintiffs did not “split a cause of action into multiple lawsuits” by “fil[ing] one complaint in which they sued everyone they believed responsible for the traffic accident” and then “arbitrat[ing] their claims against some, but not all, of the defendants”].)

Indeed, it is a regular and accepted feature of litigation governed by the FAA that the arbitration of some issues does not sever those issues from the remainder of the lawsuit. The high court has long recognized that the FAA “requires piecemeal resolution [of related disputes in different forums] when necessary to give effect to an arbitration agreement.”

(Moses H. Cone Hospital v. Mercury Constr. Corp. (1983) 460 U.S. 1, 20.) In Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S. 213, 217, the high court held that the FAA requires arbitrable claims to be compelled to arbitration “even where the result would be the possibly inefficient maintenance of separate proceedings in different forums.”

Viking River reiterated that parties may opt for arbitration procedures that depart from standard liberal rules of claim joinder, “[a]nd that is true even if bifurcated proceedings are an inevitable result.” (Viking River, supra, 596 U.S. at p. ___ [142 S.Ct. at p. 1923] [citing Dean Witter and Moses H. Cone Hospital].)

When an action includes arbitrable and nonarbitrable components, the resulting bifurcated proceedings are not severed from one another; rather, the court may “stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.”

(9 U.S.C. § 3; see Code Civ. Proc., § 1281.4.) In McGill v Citibank, N.A. (2017) 2 Cal.5th 945, 966, we explained that this principle extends to “piecemeal litigation of ‘arbitrable and inarbitrable remedies derived from the same statutory claim.’ ”

Further, Uber’s interpretation runs counter to the statutory scheme. (Kim, supra, 9 Cal.5th at p. 87.) PAGA was designed to authorize aggrieved employees to pursue enforcement actions on behalf of themselves and their current and former coworkers. (§ 2699, subd. (a).)

Under Uber’s reading, any time an aggrieved employee has signed a predispute agreement to arbitrate individual claims, he or she would no longer be able to bring suit “on behalf of himself or herself and other current or former employees.” (Ibid., italics added.)

Not only is this interpretation at odds with the language and purpose of the statute, but it would also seriously impair the state’s ability to collect and distribute civil penalties under the provisions of the statute. (See § 2699, subds. (i), (f)(2) [employers are penalized per violation for each aggrieved employee, and most of the penalties go to the state].)

As noted, Viking River left intact Iskanian’s rule against agreements that compel waiver of non-individual claims. (Viking River, at p. __ [142 S.Ct. at p. 1925]; see Iskanian, supra, 59 Cal.4th at p. 384.)