Why Did Uber Get Sued? Here's What You Need to Know About the Lawsuit

I.

Plaintiff Erik Adolph worked as a driver for defendant Uber Technologies, Inc. (Uber), delivering food to customers through the company’s Uber Eats platform. As a condition of his employment, Adolph was required to accept the technology services agreement, and because he did not timely opt out, he became bound by the arbitration provision in that agreement. The arbitration provision requires Adolph to arbitrate, on an individual basis only, almost all work-related claims he might have against Uber.

With regard to PAGA actions, the agreement says: “To the extent permitted by law, you and Company agree not to bring a representative action on behalf of others under the [PAGA] in any court or in arbitration. This waiver shall be referred to as the ‘PAGA Waiver.’ ” The agreement also includes a severability clause: “If the PAGA Waiver is found to be unenforceable or unlawful for any reason, (1) the unenforceable provision shall be severed from this Arbitration Provision; (2) severance of the unenforceable provision shall have no impact whatsoever on the Arbitration Provision or the Parties’ attempts to arbitrate any remaining claims on an individual basis pursuant to the Arbitration Provision; and (3) any representative actions brought under the PAGA must be litigated in a civil court of competent jurisdiction . . . .”

In October 2019, Adolph sued Uber in superior court, alleging individual and class claims for relief under Labor Code section 2802 and the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.). Adolph claimed that Uber misclassified him and other delivery drivers as independent contractors rather than as employees and, as a result, wrongfully failed to reimburse them for necessary business expenses. In February 2020, Adolph amended his complaint to add a claim for civil penalties under PAGA based on the same theory of misclassification. In July 2020, the trial court granted a motion by Uber to compel arbitration of Adolph’s individual Labor Code claims and dismissed Adolph’s class action claims.

Subsequently, with the trial court’s permission, Adolph filed his operative second amended complaint, which eliminated his individual Labor Code claims and class claims and retained only his PAGA claim for civil penalties. The trial court granted Adolph’s request for a preliminary injunction, preventing arbitration from proceeding. Uber filed a second motion to compel arbitration of Adolph’s independent contractor status and the enforceability of the arbitration agreement. The trial court denied the motion. Uber filed separate appeals of the injunction and the denial of the second motion to compel arbitration.

The two appeals were consolidated, and the Court of Appeal affirmed. (Adolph v. Uber Technologies, Inc. (Apr. 11, 2022, G059860, G060198) [nonpub. opn.] (Adolph).) Citing Iskanian, the Court of Appeal held that the trial court properly found that PAGA claims are not subject to arbitration, that an agreement waiving the right to bring a claim on behalf of other employees under PAGA violates public policy and is unenforceable, and that “California case law is clear that the threshold issue of whether a plaintiff is an aggrieved employee in a PAGA case is not subject to arbitration.” (Adolph, supra, G059860, G060198.)

In May 2022, Uber filed a petition for review. Before Adolph could file an answer, the United States Supreme Court decided Viking River, which abrogated in part our decision in Iskanian, as discussed further below. (Viking River, supra, 596 U.S. at pp. – [142 S.Ct. at pp. 1923–1925].) Viking River also considered the standing question at issue in this case. (Id. at p. __ [142 S.Ct. at p. 1925].) We granted review to provide guidance on statutory standing under PAGA.