SAN FRANCISCO (Legal Newsline) - Declaring itself to be the “final arbiter” on California law, the California Supreme Court ruled an Uber Eats driver can pursue a class action on behalf of other drivers even though the U.S. Supreme Court last year held the driver himself must submit labor claims to an arbitrator.
The decision keeps alive a lawsuit by Erik Adolph under California’s Private Attorneys General Act, or PAGA, while an arbitrator decides the central question of whether Adolph is an employee or an independent contractor.
The U.S. Supreme Court in 2022 held the Federal Arbitration Act preempted a California Supreme Court decision that effectively nullified pre-employment arbitration contracts if they prevented plaintiffs from splitting their individual claims from group PAGA claims. The U.S. Supreme Court ruled that would prevent employers and employees from exercising their right to enter into arbitration contracts.
The U.S. Supreme Court also concluded that an employee loses the right to pursue a PAGA claim once his own claim is submitted to arbitration, since at that point he becomes “no different from a member of the general public” and barred by California law from suing on behalf others under PAGA.
“We are not bound by the high court’s interpretation of California law,” the California Supreme Court said, however, asserting its own right to be the “final arbiter of what is state law.”
California law has only two requirements for standing, the state Supreme Court said: The plaintiff must be an employee of the company being sued and must have suffered one or more violations of labor laws. The court previously rejected the argument a plaintiff lost standing after settling his individual claim.
Uber argued it made no sense for Adolph to be able to proceed with a PAGA claim when doing so would require him to establish in court he was an employee. The U.S. Supreme Court, in Viking Cruises, requires him to arbitrate that very question.
The California Supreme Court disagreed, saying the trial court could stay the class proceedings until Adolph’s arbitration is completed. If the arbitrator decides Adolph is an employee, the PAGA case could proceed. If not, it would be dismissed.
Several business organizations urged the California Supreme Court to narrow standing requirements “in order to curb alleged abuses of PAGA.
“These arguments are best directed to the Legislature, which may amend the statute to limit PAGA enforcement if it chooses,” the court concluded.