The California Supreme Court has granted review in an arbitration case that is expected to show how the state judiciary interprets the U.S. Supreme Court’s ruling in in Viking v. Moriana, which found lawsuits brought under California’s Private Attorneys General Act (PAGA) are subject to federal arbitration rules.
The case before the state court, Adolph v. Uber, involves a driver who is an independent contractor, and whether or not he can bring a PAGA claim after he signed an arbitration agreement.
The case is significant because it should provide the first chance for the state’s high court to weigh in on the PAGA arbitration issue since the SCOTUS decided Viking in June, holding that California’s PAGA doesn’t supersede the Federal Arbitration Act.
In Justice Sonia Sotomayor’s concurrence with the 8-1 ruling (Justice Clarence Thomas was the only dissent), she said California courts may have the last word on whether or not the state can “adequately enforce its Labor Code without assistance from private attorneys general.”
In the face of such questions and California’s budget surplus, PAGA opponents contend the state has enough resources to enforce the law, and that the law has engendered a cottage industry of plaintiffs’ attorneys that file claim after claim to recover large fees.
The California Supreme Court granting review in Adolph suggests the high court here has an interest in weighing in on the PAGA question, Ashley Hoffman, a labor and employment policy advocate with the California Chamber of Commerce, told the Northern California Record.
“How does PAGA interact with arbitration – if you as an individual signed an arbitration agreement, does that mean that you can continue to serve as a PAGA plaintiff?” Hoffman said. “That’s really what it all boils down to, is that question.”
After briefing and oral arguments, the state Supreme Court is expected to issue its decision early in 2023.
It will come down to details, Hoffman said, adding if the state justices rule far afield of the Viking SCOTUS ruling, there could be further legal challenges.
PAGA claims have grown exponentially since the law took effect in 2004, devastating many small operations.
It’s not yet clear if lawmakers may pass a bill in response to the SCOTUS Viking ruling; PAGA reform has been discussed in Sacramento for years, and all that’s passed have been PAGA exemptions for union workers in construction (AB 1654 - Rubio) and janitorial services (SB 646 - Hertzberg).
Meanwhile, CalChamber is supporting a reform measure that just qualified for the November 2024 election ballot; it would replace PAGA with increased enforcement by the California Labor & Workforce Development Agency (LWDA), which oversees the law.
“CalChamber has expressed for a very long time that PAGA is problematic, that it benefits attorneys, not workers or employers, and we still strongly stand by that and the need for reform in this area,” Hoffman said.