California Supreme Court Breaks From Federal Precedent On PAGA

PAGA permits an "aggrieved employee" to bring representative claims on behalf of him or herself and other workers subject to the same alleged violations of law. In Viking River Cruises, the U.S. Supreme Court—acknowledging that California courts would have the final say on California law—held that if a plaintiff is compelled to arbitrate individual claims because of an arbitration agreement, the remaining non-individual claims must be dismissed for lack of standing. While California state law provides PAGA actions cannot be divided into individual and non-individual claims due to an agreement to arbitrate individual claims, the U.S. Supreme Court found that the Federal Arbitration Act (FAA) preempted that state law.

The California Supreme Court disagreed, finding no conflict between the FAA and California's PAGA framework. On that basis, the Court held that a plaintiff does not lose standing in court simply because he or she is compelled to arbitrate individual claims.

The Court did not determine whether non-individual claims should be stayed pending the outcome of arbitration of individual claims, but it left open the possibility that courts "may" decide to pause proceedings during that interim period. Nevertheless, regardless of the new law stated in Adolph, the California Court of Appeal's decision in Rocha v. U-Haul Co. earlier this year still provides a useful tool for employers to end a PAGA suit altogether once an employer can prevail against the named plaintiff.

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