California Court of Appeal, Gregg v. Uber Technologies, Inc., Docket No. B302925

Labor Law

 

Arbitration

 

Independent Contractor v. Employee

 

Uber

 

Private Attorneys General Act of 2004 (PAGA)

 

Non-Individual PAGA Claims And Individual PAGA Claims

 

PAGA Waiver

 

California Law

 

 

 

Johnathon Gregg sued Uber Technologies, Inc., and Rasier-CA, LLC (collectively, “Uber”), under the Private Attorneys General Act of 2004 (PAGA), Labor Code section 2698 et seq. He alleged Uber willfully misclassified him as an independent contractor rather than an employee, which led to numerous other Labor Code violations. In response, Uber moved to compel arbitration under the “Arbitration Provision” in the “Technology Services Agreement” (“TSA”), which Gregg accepted to use Uber’s smartphone application and become an Uber driver.

 

 

The trial court denied Uber’s motion and, in April 2021, this court affirmed. The United States Supreme Court vacated the affirmance in June 2022, when it granted Uber’s petition for writ of certiorari and remanded the case for further consideration in light of Viking River Cruises, Inc. v. Moriana (2022) ___U.S. ___ [142 S.Ct. 1906, 213 L.Ed.2d 179] (Viking River). In light of Viking River, we first determine the TSA’s PAGA Waiver is invalid and must be severed from the Arbitration Provision. We then conclude that under the Arbitration Provision’s remaining terms, Gregg must resolve his claim for civil penalties based on Labor Code violations he allegedly suffered (i.e., his individual PAGA claim) in arbitration, and that his claims for penalties based on violations allegedly suffered by other current and former employees (i.e., his non-individual PAGA claims) must be litigated in court. Lastly, we conclude that under California law, Gregg is not stripped of standing to pursue his non-individual claims in court simply because his individual claim must be arbitrated. Consequently, his non-individual claims are not subject to dismissal at this time. Instead, under the Arbitration Provision, they must be stayed pending completion of arbitration. Accordingly, we affirm in part and reverse in part the order denying Uber’s motion to compel arbitration. We remand the case to the trial court with directions to: (1) enter an order compelling Gregg to arbitrate his individual PAGA claim; and (2) stay his non-individual claims pending completion of arbitration.

 

 

PAGA authorizes an “aggrieved employee” to initiate a civil action “on behalf of himself or herself and other current or former employees” to recover civil penalties for violations of the Labor Code ordinarily “assessed and collected by the Labor and Workforce Development Agency.” (§ 2699, subd. (a).)

 

 

(…) Under Viking River, employers may enforce an agreement mandating arbitration of a plaintiff’s individual PAGA claim, even if the agreement does not require arbitration of the plaintiff’s non-individual claims. (See id. at p. 1925.)

 

 

(…) We begin our analysis by addressing whether the PAGA Waiver is enforceable under Viking River. We conclude it is not.

 

 

(…) We decline to follow Olabi for a few reasons. As an initial matter, the opinion was filed before Viking River was decided. (See Olabi, supra, 50 Cal.App.5th 1017; Viking River, supra, 142 S.Ct. 1906.) Therefore, the Olabi court did not interpret the agreement before it in the context of current law, which, as discussed above, now permits a PAGA lawsuit to be split into arbitrable and non-arbitrable components, and does not require it to be treated as an indivisible unit for purposes of arbitration.

 

 

(…) We hold that under California law, an alleged “aggrieved employee” (§ 2699, subd. (c)) is not stripped of standing to assert non-individual PAGA claims in court simply because he or she has been compelled to arbitrate his or her individual PAGA claim. (See Kim, supra, 9 Cal.5th at pp. 83-85; see also Johnson, supra, 66 Cal.App.5th at p. 930; Rocha v. U-Haul Co. of California (2023) 88Cal.App.5th 65, 77(Rocha).

 

 

(…) Uber appears to assume that even if Gregg’s non-individual claims are stayed pending completion of arbitration on his individual claim, he will be allowed to relitigate whether he is an “aggrieved employee” in court because the doctrine of issue preclusion will not apply to the arbitrator’s finding on the issue. This assumption is premature at best, and incorrect at worst. A split in authority has recently developed on this issue (compare Rocha, supra, 88Cal.App.5 that pp. 78-82 with Gavriiloglou v. Prime Healthcare Management, Inc. (2022) 83 Cal.App.5th 595, 602-607), and the parties have not asked to brief it. In any event, we express no opinion on the matter and need not address it. As discussed above, Kim and Johnson establish that regardless of its resolution, Gregg has not lost standing to assert his non-individual claims in court merely because he has agreed to arbitrate his individual claim.

 

 

Having concluded Gregg’s non-individual claims are not subject to dismissal at this time, we agree with the parties that under the Arbitration Provision, they should be stayed pending completion of arbitration on his individual claim. On this point, the Arbitration Provision states: “To the extent that there are any claims to be litigated in a civil court of competent jurisdiction because a civil court of competent jurisdiction determines that the PAGA Waiver is unenforceable with respect to those claims, the parties agree that litigation of those claims shall be stayed pending the outcome of any individual claims in arbitration.”

 

 

 

(California Court of Appeal, March 24, 2023, Gregg v. Uber Technologies, Inc., Docket No. B302925, Certified for Publication)