Petition for Writ of Certiorari — Uber Technologies, Inc., et al., Petitioners v. Johnathon Gregg
Supreme Court briefDec 12, 2023
Ask Donna
What actually matters in this document.
Text
No.
IN THE
Supreme Court of the United States
UBER TECHNOLOGIES, INC. AND RASIER-CA, LLC,
Petitioners,
v.
JOHNATHON GREGG,
Respondent.
On Petition For A Writ Of Certiorari
To The California Court Of Appeal
PETITION FOR A WRIT OF CERTIORARI
ANDREW M. SPURCHISE
SOPHIA B. COLLINS
LITTLER MENDELSON, P.C.
900 Third Avenue
New York, NY 10022
JOSEPH E. BARAKAT
GIBSON DUNN & CRUTCHER LLP
2001 Ross Avenue, Suite 2100
Dallas, TX 75201
(214) 698-3301
THEANE D. EVANGELIS
Counsel of Record
BLAINE H. EVANSON
BRADLEY J. HAMBURGER
ALEXANDER N. HARRIS
PATRICK J. FUSTER
GIBSON, DUNN & CRUTCHER LLP
333 South Grand Avenue
Los Angeles, CA 90071
(213) 229-7000
tevangelis@gibsondunn.com
Counsel for Petitioners
QUESTION PRESENTED
In Viking River Cruises, Inc. v. Moriana, 142 S. Ct.
1906 (2022), this Court held that the Federal Arbitration Act preempts the California-law rule that actions
under the California Labor Code Private Attorneys
General Act (PAGA) “cannot be divided into individual and non-individual claims.” Id. at 1925. This
Court also instructed that the arbitrable individual
PAGA claims must be “pared away” from the nonindividual claims and “committed to a separate proceeding.” Ibid.
The California courts have refused to follow this
Court’s guidance. In this case (as in several others),
the California Court of Appeal refused to sever the arbitrable individual claim from the non-individual
claims on the theory that this aspect of Viking River
was grounded in California law rather than the Federal Arbitration Act. App., infra, 24a-25a. The California Supreme Court has since similarly held that
PAGA claims constitute “a single action” in which the
individual PAGA claim compelled to arbitration nonetheless remains in court for the purpose of allowing a
plaintiff to establish statutory standing to pursue the
non-individual claims. Adolph v. Uber Technologies,
Inc., 532 P.3d 682, 694-695 (2023).
The question presented is:
Does the Federal Arbitration Act require the complete severance of arbitrable individual PAGA claims
from non-individual PAGA claims, with the individual
PAGA claims committed to a separate proceeding?
ii
PARTIES TO THE PROCEEDING AND
RULE 29.6 DISCLOSURE STATEMENT
1. The caption contains the names of all the parties to the proceedings below.
2. Rasier-CA, LLC is a wholly owned subsidiary of
Uber Technologies, Inc., which is a publicly held corporation and not a subsidiary of any entity. Based
solely on SEC filings regarding beneficial ownership
of the stock of Uber Technologies, Inc., petitioners are
unaware of any shareholder who beneficially owns
more than 10% of Uber Technologies, Inc.’s outstanding stock.
iii
RELATED PROCEEDINGS
Superior Court for the County of Los Angeles
Gregg v. Uber Technologies, Inc.
No. BC719085 (Dec. 5, 2019)
(denying motion to compel arbitration)
Superior Court for the County of San Francisco
In re: Uber Technologies Wage & Hour Cases
No. CJC-21-005179 (Feb. 14, 2022)
(consolidating cases)
California Court of Appeal
Gregg v. Uber Technologies, Inc.
No. B302925
(initial opinion) (Apr. 21, 2021)
(on remand from this Court) (Mar. 24, 2023)
California Supreme Court
Gregg v. Uber Technologies, Inc.
No. S269000 (June 30, 2021)
(denying petition for review)
Gregg v. Uber Technologies, Inc.
No. S279722
(granting petition for review) (June 14, 2023)
(dismissing review) (Sept. 13, 2023)
Supreme Court of the United States
Uber Technologies, Inc. v. Gregg
No. 21-453 (June 27, 2022)
(granting, vacating, and remanding)
iv
TABLE OF CONTENTS
Page
OPINIONS BELOW .................................................... 1
JURISDICTION .......................................................... 2
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED ...................................... 2
INTRODUCTION ........................................................ 3
STATEMENT .............................................................. 5
A. Legal Background........................................... 5
B. Procedural History. ...................................... 11
REASONS FOR GRANTING THE PETITION ....... 17
I.
The California Supreme Court and Court
of Appeal Have Defied Viking River’s
Interpretation of the FAA. ................................. 18
II. The Question Presented Is Exceptionally
Important. ........................................................... 27
CONCLUSION .......................................................... 31
v
TABLE OF APPENDICES
Page
APPENDIX A:
Order of the California Supreme Court
Dismissing Review (Sept. 13, 2023) ................... 1a
APPENDIX B:
Order of the California Supreme Court Granting
Petition for Review and Deferring Action
Pending Adolph v. Uber Technologies, Inc.
(June 14, 2023) .................................................... 2a
APPENDIX C:
Opinion of the California Court of Appeal
(Mar. 24, 2023) .................................................... 3a
APPENDIX D:
Order of this Court Granting Petition for
Writ of Certiorari, Vacating Judgment, and
Remanding (June 27, 2022) .............................. 29a
APPENDIX E:
Order of the Superior Court for San Francisco
County Consolidating Case (Feb. 14, 2022) ..... 30a
APPENDIX F:
Order of the California Supreme Court
Denying Petition for Review (June 30, 2021) .. 39a
APPENDIX G:
Opinion of the California Court of Appeal
(Apr. 21, 2021) ................................................... 40a
APPENDIX H:
Order of the Superior Court for Los Angeles
County Denying Motion to Compel
Arbitration (Dec. 5, 2019) ................................. 52a
vi
APPENDIX I:
Transcript of Hearing before the
Superior Court for Los Angeles County on
Motion to Compel Arbitration
(Dec. 5, 2019) ..................................................... 54a
APPENDIX J:
Constitutional and Statutory
Provisions Involved ........................................... 74a
U.S. Const. Art. VI, cl. 2 ................................... 74a
9 U.S.C. § 2 ........................................................ 74a
Cal. Labor Code § 2699 ..................................... 75a
vii
TABLE OF AUTHORITIES
Page(s)
Cases
Adolph v. Uber Technologies, Inc.,
532 P.3d 682 (Cal. 2023) ..................... 4, 15, 16, 17,
23, 24, 25, 27
American Express Co. v. Italian Colors
Restaurant,
570 U.S. 228 (2013) ................................................ 6
American Tradition Partnership, Inc. v.
Bullock,
567 U.S. 516 (2012) .............................................. 28
Arias v. Superior Court,
209 P.3d 923 (Cal. 2009) ........................................ 8
AT&T Mobility LLC v. Concepcion,
563 U.S. 333 (2011) ...................... 5, 6, 7, 25, 27, 31
Booth v. Maryland,
482 U.S. 496 (1987) .............................................. 28
Bosse v. Oklahoma,
580 U.S. 1 (2016) .................................................. 28
Chamber of Commerce of the United States
of America v. Bonta,
62 F.4th 473 (9th Cir. 2023) .................................. 7
Circuit City Stores, Inc. v. Adams,
532 U.S. 105 (2001) ................................................ 6
viii
Citizens United v. FEC,
558 U.S. 310 (2010) .............................................. 28
Cohen v. UBS Financial Services, Inc.,
799 F.3d 174 (2d Cir. 2015) ................................. 22
Cooper v. Aaron,
358 U.S. 1 (1958) .................................................. 26
Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213 (1985) .................................. 20, 21, 22
DIRECTV, Inc. v. Imburgia,
577 U.S. 47 (2015) ...................................... 7, 27, 31
Epic Systems Corp. v. Lewis,
138 S. Ct. 1612 (2018) .............................. 5, 6, 7, 19
First Options of Chicago, Inc. v. Kaplan,
514 U.S. 938 (1995) ........................................ 19, 20
Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20 (1991) .................................................. 6
Iskanian v. CLS Transportation Los
Angeles, LLC,
327 P.3d 129 (Cal. 2014) .................................... 8, 9
KPMG LLP v. Cocchi,
565 U.S. 18 (2011) ................................................ 21
Lamps Plus, Inc. v. Varela,
139 S. Ct. 1407 (2019) ................................ 7, 20, 31
Laver v. Credit Suisse Securities (USA), LLC,
976 F.3d 841 (9th Cir. 2020) ................................ 22
ix
Mejia v. Farmland Mutual Insurance Co.,
2018 WL 3198006 (E.D. Cal. June 26, 2018) ...... 30
Montana v. Wyoming,
563 U.S. 368 (2011) .............................................. 26
Moses H. Cone Memorial Hospital v.
Mercury Construction Corp.,
460 U.S. 1 (1983) .......................................... 5, 6, 20
Nitro-Lift Technologies, LLC v. Howard,
568 U.S. 17 (2012) .......................................... 26, 28
Perry v. Thomas,
482 U.S. 483 (1987) .......................................... 7, 31
Piplack v. In-N-Out Burgers,
88 Cal. App. 5th 1281 (2023) ............................... 23
Preston v. Ferrer,
552 U.S. 346 (2008) .......................................... 7, 31
Seifu v. Lyft, Inc.,
89 Cal. App. 5th 1129 (2023) ............................... 23
Shearson/American Express, Inc. v. McMahon,
482 U.S. 220 (1987) .............................................. 21
Southland Corp. v. Keating,
465 U.S. 1 (1984) ...................................... 5, 6, 7, 31
Stolt-Nielsen S.A. v. AnimalFeeds
International Corp.,
559 U.S. 662 (2010) .............................................. 20
Uber Technologies, Inc. v. Gregg,
142 S. Ct. 2860 (2022) .......................................... 13
x
Viking River Cruises, Inc. v. Moriana,
142 S. Ct. 1906 (2022) ............. 3, 5, 8, 9, 10, 11, 12,
16, 18, 19, 22, 23,
25, 26, 27, 30, 31
Wesson v. Staples the Office Superstore, LLC,
68 Cal. App. 5th 746 (2021) ................................. 30
Constitutional Provisions
U.S. Const. Art. VI, cl. 2.............................................. 2
Statutes
9 U.S.C. § 2 .......................................................... 2, 6, 9
9 U.S.C. § 4 .................................................................. 6
28 U.S.C. § 1257(a) ...................................................... 2
Cal. Civ. Proc. Code § 1281.4 .............................. 23, 24
Cal. Civ. Proc. Code § 1287.4 .................................... 24
Cal. Lab. Code § 2699(a) ............................. 3, 8, 15, 16
Cal. Lab. Code § 2699(c) .................................... 3, 8, 15
Cal. Lab. Code § 2699(f) .............................................. 8
Cal. Lab. Code § 2699(g) ............................................. 8
Cal. Lab. Code § 2699(i) .............................................. 8
xi
Other Authorities
Anthony Zaller, The High Stakes and
Risks of California’s Private
Attorneys General Act (PAGA),
California Employment Law Report
(May 26, 2023) ...................................................... 29
Ashley Hoffman, Private Attorneys General Act,
CalChamber Advocacy (Jan. 2023) ..................... 29
CABIA Foundation, California Private
Attorneys General Act of 2004: Outcomes
and Recommendations (Mar. 2021) ..................... 29
Charles Thompson et al., Employers Must
Brace for PAGA-Like Bills Across US,
Law360 (June 18, 2021) ....................................... 30
Dep’t of Justice, Updated Guidance
Regarding the Use of Arbitration and
Case Selection Criteria (Nov. 12, 2020) ............... 30
Ken Monroe, Frivolous PAGA Lawsuits Are
Making Some Lawyers Rich, But They
Aren’t Helping Workers or Employees,
L.A. Times (Dec. 6, 2018) ..................................... 29
Lyra Haas, The Endless Battleground:
California’s Continued Opposition to the
Supreme Court’s Federal Arbitration Act
Jurisprudence,
94 B.U. L. Rev. 1419 (2014) ................................... 7
xii
Nam D. Pham & Mary Donovan, Fairer,
Faster, Better III: An Empirical Assessment
of Consumer and Employment Arbitration
(Mar. 2022) ........................................................... 30
Rich Peters, SoCal Company Hit with
PAGA Lawsuit: ‘Purely a Shakedown on
Businesses’, Southern California Record
(Feb. 18, 2020) ...................................................... 29
Sales and Contracts to Sell in Interstate and
Foreign Commerce, and Federal
Commercial Arbitration, Hearing Before a
Subcommittee of the Senate Committee on
the Judiciary, 67th Cong., 4th Sess. (1923) .......... 5
IN THE
Supreme Court of the United States
No.
UBER TECHNOLOGIES, INC. AND RASIER-CA, LLC
Petitioners,
v.
JOHNATHON GREGG,
Respondent.
On Petition For A Writ Of Certiorari
To The California Court Of Appeal
PETITION FOR A WRIT OF CERTIORARI
Uber Technologies, Inc. and Rasier-CA, LLC (collectively, Uber) respectfully petition for a writ of certiorari to review the judgment of the California Court
of Appeal in this case.
OPINIONS BELOW
The California Supreme Court’s order dismissing
Uber’s petition for review (App., infra, 1a) is not reported. The California Court of Appeal’s opinion on
remand from this Court (id. at 3a-28a) is reported at
89 Cal. App. 5th 786 (2023). A prior opinion of the
California Court of Appeal (App., infra, 40a-51a) is not
reported but is available at 2021 WL 1561297. The
order of the Superior Court of Los Angeles County
denying the motion to compel arbitration (App., infra,
52a-53a) is not reported.
2
JURISDICTION
The California Court of Appeal issued its opinion
on March 24, 2023. The California Supreme Court
granted Uber’s timely petition for review on June 14,
2023, but later dismissed review on September 13,
2023. This Court has jurisdiction under 28 U.S.C.
§ 1257(a).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The Supremacy Clause of the United States Constitution states in relevant part: “This Constitution,
and the Laws of the United States which shall be
made in Pursuance thereof … shall be the supreme
Law of the Land; and the Judges in every State shall
be bound thereby, any Thing in the Constitution or
Laws of any State to the Contrary notwithstanding.”
U.S. Const. Art. VI, cl. 2.
Section 2 of the Federal Arbitration Act (FAA)
states: “A written provision in any maritime transaction or a contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the
refusal to perform the whole or any part thereof, or an
agreement in writing to submit to arbitration an existing controversy arising out of such a contract,
transaction, or refusal, shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract.” 9 U.S.C.
§ 2.
The California Labor Code Private Attorneys General Act (PAGA) states in relevant part: “Notwithstanding any other provision of law, any provision of
this code that provides for a civil penalty to be as-
3
sessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees,
for a violation of this code, may, as an alternative, be
recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and
other current or former employees pursuant to the
procedures specified in Section 2699.3. … For purposes of this part, ‘aggrieved employee’ means any
person who was employed by the alleged violator and
against whom one or more of the alleged violations
was committed.” Cal. Lab. Code § 2699(a), (c).
INTRODUCTION
This is not the first time this case has appeared
before this Court. Just last year, this Court granted
Uber’s petition for a writ of certiorari, vacated the California Court of Appeal’s judgment, and remanded the
case for further consideration in light of Viking River
Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022). This
Court held in Viking River that the FAA preempts
California law “insofar as it precludes division of
PAGA actions into individual and non-individual
claims through an agreement to arbitrate.” Id. at
1924. In other words, federal law requires enforcement of an agreement between an employer and employee to arbitrate only whether that employee (and
not a host of other employees) suffered a Labor Code
violation giving rise to penalties under PAGA. This
Court also implemented that holding by requiring
that the individual PAGA claim be “committed to a
separate proceeding” for arbitration. Id. at 1925.
The California courts did not faithfully apply Viking River on remand. The California Court of Appeal
determined that the FAA does not require a plaintiff ’s
4
“individual claim [to] be ‘severed’ from his nonindividual claims.” App., infra, 24a-25a. Rather, the Court
of Appeal concluded that the individual PAGA claim,
even after being compelled to arbitration, could remain in court for the purpose of establishing statutory
standing to pursue the non-individual claims. The
California Supreme Court later adopted this same
reasoning in Adolph v. Uber Technologies, Inc., 532
P.3d 682 (Cal. 2023), holding that the two claims “remai[n] part of the same action” even after the individual PAGA claim has been sent to arbitration. Id. at
693.
This repudiation of Viking River’s severability
holding undermines the FAA in two important ways.
First, the California Supreme Court suggested that
trial courts have discretion under California law to
stay the non-individual claims or else permit simultaneous litigation of the individual issues, which puts
the parties’ federal rights at the mercy of a trial
judge’s discretionary state-law determination. Second, notwithstanding the parties’ right under the FAA
to decide the issues subject to arbitration, the California courts have retroactively expanded the scope of
the agreed-upon arbitration of the individual claim
into a contest over statutory standing for the nonindividual claims in court. The result is the individual
PAGA claim in this case has not been fully committed
to a separate arbitral proceeding even though that is
exactly what this Court ordered in Viking River.
The California Court of Appeal reached this impermissible result by conflating this Court’s severability holding under the FAA with its separate interpretation of PAGA under California law. As Justice Sotomayor explained in her Viking River concurrence,
the California courts have the “last word” on how to
5
interpret PAGA. 142 S. Ct. at 1925. But this Court
just as assuredly has the last word on the interpretation of federal law under the Supremacy Clause.
Because the Court of Appeal’s holding is incompatible with the FAA, this Court should either grant
review or summarily reverse to make clear that it
meant what it said in Viking River: the individual
claim must be committed to a separate proceeding.
STATEMENT
A. Legal Background.
1. Congress enacted the FAA “in 1925 in response to widespread judicial hostility to arbitration
agreements.” AT&T Mobility LLC v. Concepcion, 563
U.S. 333, 339 (2011). That hostility harmed parties to
both commercial and labor contracts, depriving them
of arbitration’s many benefits—“not least the promise
of quicker, more informal, and often cheaper resolutions for everyone involved.” Epic Systems Corp. v.
Lewis, 138 S. Ct. 1612, 1621 (2018).
Congress codified a “liberal federal policy favoring
arbitration” to overcome the hostility that pervaded
not only the federal judiciary, but state legislatures
and courts as well. Moses H. Cone Memorial Hospital
v. Mercury Construction Corp., 460 U.S. 1, 24 (1983).
During hearings on the legislation that became the
FAA, Senators canvassed “the widespread unwillingness of state courts to enforce arbitration agreements”
and criticized “the failure of state arbitration statutes
to mandate enforcement of arbitration agreements.”
Southland Corp. v. Keating, 465 U.S. 1, 13-14 (1984)
(citing Sales and Contracts to Sell in Interstate and
Foreign Commerce, and Federal Commercial Arbitration, Hearing Before a Subcommittee of the Senate
Committee on the Judiciary, 67th Cong., 4th Sess. 8
6
(1923)). The bill they ultimately adopted “foreclose[d]
state legislative attempts to undercut the enforceability of arbitration agreements.” Id. at 16.
In large part, Congress accomplished that objective through “Section 2, the ‘primary substantive provision of the Act.’ ” Concepcion, 563 U.S. at 339 (quoting Moses H. Cone, 460 U.S. at 24). That provision
mandates that arbitration agreements “shall be valid,
irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2; see also § 4 (courts shall “direc[t] the parties to proceed to arbitration in accordance with the terms of the agreement”). The FAA
thereby ensures that parties can make (and must adhere to) arbitration agreements by requiring courts to
“place arbitration agreements on an equal footing
with other contracts and enforce them according to
their terms.” Concepcion, 563 U.S. at 339 (citations
omitted). Equal footing means “ ‘rigorou[s]’ ” adherence to the agreement, “ ‘including terms that specify
with whom the parties choose to arbitrate their disputes and the rules under which that arbitration will
be conducted.’ ” Epic Systems, 138 S. Ct. at 1621
(quoting American Express Co. v. Italian Colors Restaurant, 570 U.S. 228, 233 (2013)).
This Court has consistently rejected invitations to
curtail Section 2’s sweeping text. For example, this
Court has confirmed that Section 2 covers all arbitration agreements contained in contracts involving commerce (except as carved out by Section 1), not only
agreements to arbitrate commercial disputes. See
Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113114 (2001). This Court has also made clear that agreements to arbitrate statutory claims are enforceable
under the FAA. See Gilmer v. Interstate/Johnson
7
Lane Corp., 500 U.S. 20, 26 (1991). And this Court
has overruled creative interpretations of federal statutes that would “effectively nullif[y] the [Federal] Arbitration Act.” Epic Systems, 138 S. Ct. at 1620-1622.
But hostility to arbitration—which has only increased
in recent years—comes in many forms. For that reason, this Court has been ever “alert to new devices and
formulas” that would expressly or implicitly “declar[e]
arbitration against public policy.” Id. at 1623.
The California Legislature and California courts
have been especially inventive when it comes to new
devices and formulas that undermine arbitration
agreements. Many of those “California laws or judgemade rules” have come before this Court. Chamber of
Commerce of the United States of America v. Bonta, 62
F.4th 473, 478 (9th Cir. 2023) (collecting examples).
Among other decisions, this Court has held that the
FAA preempts California statutes requiring a judicial
forum for franchise claims (Southland, 465 U.S. at 10)
and wage disputes (Perry v. Thomas, 482 U.S. 483,
491 (1987)); a California statute granting a state
agency primary jurisdiction over talent agents (Preston v. Ferrer, 552 U.S. 346, 359 (2008)); a California
judge-made rule requiring the availability of class
procedures in arbitration (Concepcion, 563 U.S. at
344); and the use of California’s canon construing contract language against the drafter to undercut arbitration (DIRECTV, Inc. v. Imburgia, 577 U.S. 47, 58
(2015)) or to impose class procedures in arbitration on
unwilling parties (Lamps Plus, Inc. v. Varela, 139
S. Ct. 1407, 1417, 1422 (2019)). See also generally
Lyra Haas, The Endless Battleground: California’s
Continued Opposition to the Supreme Court’s Federal
Arbitration Act Jurisprudence, 94 B.U. L. Rev. 1419
(2014).
8
2. The California Labor Code Private Attorneys
General Act permits a plaintiff to seek civil penalties
for violations of California wage-and-hour law “as the
proxy or agent of the state’s labor law enforcement
agencies.” Arias v. Superior Court, 209 P.3d 923, 933
(Cal. 2009). Under PAGA, a plaintiff must bring “a
civil action … on behalf of himself or herself and other
current or former employees.”
Cal. Lab. Code
§ 2699(a). The plaintiff also must be an “ ‘aggrieved
employee’ … against whom one or more of the alleged
violations was committed.” § 2699(c).
Of the civil penalties recovered in a PAGA action,
75 percent goes to the State, while the remaining
25 percent is distributed among the aggrieved employees. Cal. Lab. Code § 2699(i). PAGA sets default
penalties of $100 per employee subjected to a violation
per pay period for the first violation and ratchets the
penalty up to $200 per employee per pay period for
each subsequent violation. § 2699(f), (g)(1). This
Court has observed that, “[i]ndividually, these penalties are modest; but given PAGA’s additive dimension,
low-value claims may easily be welded together into
high-value suits.” Viking River, 142 S. Ct. at 1915.
When the action involves a thousand workers, the
stakes increase a thousand-fold.
In Iskanian v. CLS Transportation Los Angeles,
LLC, 327 P.3d 129 (Cal. 2014), the California Supreme Court held that California’s public policy prevents the enforcement of an arbitration agreement
categorically waiving the right to bring a PAGA action
in court. Id. at 148-149. It also declined to permit the
arbitration of “individual PAGA claims for Labor Code
violations that an employee suffered” out of concern
that “ ‘a single-claimant arbitration under the PAGA
for individual penalties will not result in the penalties
9
contemplated under the PAGA to punish and deter
employer practices that violate the rights of numerous
employees under the Labor Code.’ ” Id. at 149 (citation
omitted). The California Supreme Court then upheld
both the anti-waiver and the anti-severability rules
under the FAA on the theory that PAGA “lies outside
the FAA’s coverage” because it creates “a type of qui
tam action” where the employee litigates on behalf of
the State. Id. at 148-151.
3. This Court granted review in Viking River to
consider whether the FAA preempted PAGA as interpreted in Iskanian. First, this Court held that the
FAA applies to PAGA claims, no less than any other
claims that “ ‘arise out of ’ the parties’ contractual relationship.” 142 S. Ct. at 1919 n.4 (quoting 9 U.S.C. §
2).
Section 2 therefore controls, “regardless of
whether a PAGA action is in some sense also a dispute
between an employer and the State,” because “nothing
in the FAA categorically exempts claims belonging to
sovereigns.” Ibid.
This Court next determined that the FAA did not
preempt California’s anti-waiver rule. In the Court’s
view, representative arbitration is not necessarily inconsistent with the FAA “as a categorical rule.” 142
S. Ct. at 1922. At least under some circumstances,
“representative actions in which a single agent litigates on behalf of a single principal” do not violate an
agreement requiring bilateral arbitration. Id. at
1922-1923. Consistent with the FAA, then, California
law could continue to prohibit the wholesale waiver of
PAGA claims. Id. at 1924-1925.
But this Court held that “the FAA preempts the
rule of Iskanian insofar as it precludes division of
PAGA actions into individual and non‐individual
claims through an agreement to arbitrate.” 142 S. Ct.
10
at 1924. This “built-in mechanism of claim joinder,”
by “allow[ing] plaintiffs to unite a massive number of
claims in a single-package suit,” had improperly coerced parties to forgo arbitration or else relinquish
their right under the FAA to decide “which claims are
subject to arbitration.” Id. at 1923-1924. Even if California law “allows plaintiffs to unite a massive number of claims in a single-package suit,” the parties
have a federal right to tailor the “ ‘stakes’ ” as appropriate to an arbitration’s typical lack of “ ‘procedural
rigor.’ ” Id. at 1924 (citations omitted). The upshot is
that parties can agree to arbitrate only the “individual” PAGA claim seeking civil penalties for violations
that the plaintiff himself allegedly suffered. Id. at
1925.
This Court made one last holding in Viking
River—this one under California law. California Labor Code § 2699, as this Court “s[aw] it,” “provides no
mechanism to enable a court to adjudicate non‐individual PAGA claims once an individual claim has been
committed to a separate proceeding.” 142 S. Ct. at
1925. Instead, “a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also
maintaining an individual claim in that action.” Ibid.
But “[w]hen an employee’s own dispute is pared away
from a PAGA action, the employee is no different from
a member of the general public, and PAGA does not
allow such persons to maintain suit.” Ibid. This Court
concluded that a plaintiff without her own individual
PAGA claim “lacks statutory standing to continue to
maintain her non-individual claims in court, and the
correct course is to dismiss her remaining claims.”
Ibid.
11
B. Procedural History.
1. Uber is a technology company that developed
the smartphone application known as the “Uber App,”
which connects riders in need of transportation with
drivers who can provide it. App., infra, 5a.
As of December 2015, drivers wishing to use the
Uber App must first enter into the Technology Services Agreement. App., infra, 5a. The Agreement contains an arbitration provision. Ibid. Arbitration is not
a mandatory condition of drivers’ contractual relationship with Uber, as drivers may opt out of the arbitration provision by submitting an opt-out notice within
30 days of executing the Agreement. Id. at 6a.
Drivers who do not opt out agree to resolve virtually all disputes with Uber—including those “arising
out of or related to [drivers’] relationship with [Uber]”
or “regarding any … wage-hour law”—“through final
and binding arbitration on an individual basis only
and not by way of court or jury trial, or by way of class,
collective, or representative action.” App., infra, 5a.
The Agreement further states that any action
“brought on a private attorney general basis” “shall be
resolved in arbitration on an individual basis only”
and “that such an action may not be used to resolve
the claims or rights of other individuals in a single or
collective proceeding.” Id. at 6a. And it contains a
severability clause providing that if any portion of the
PAGA waiver “is found to be unenforceable,” (1) “the
unenforceable provision shall be severed,” (2) the severance “shall have no impact whatsoever” on “attempt[s] to arbitrate any remaining claims on an individual basis,” and (3) “any representative action[s]
brought under PAGA on behalf of others must be litigated” in court. Id. at 13a.
12
Respondent Johnathon Gregg signed up to use the
Uber App and accepted the Agreement in October
2016. App., infra, 6a. Gregg did not exercise his right
to opt out of the arbitration provision. Ibid.
2. Despite agreeing to individual arbitration,
Gregg filed a PAGA action in August 2018, seeking
civil penalties on the theory that Uber allegedly misclassified him and other drivers as independent contractors. App., infra, 6a-7a. Uber moved to compel
arbitration of Gregg’s individual PAGA claim and to
dismiss the non-individual claims brought on behalf
of other drivers. Id. at 7a. In the alternative, Uber
requested that the court order Gregg to arbitrate his
individual status as an “aggrieved employee” and stay
proceedings pending that arbitration. Ibid.
The Superior Court for Los Angeles County denied Uber’s motion under Iskanian, concluding that
the FAA did not apply to Gregg’s claims because a
PAGA claim “is brought on behalf of the State”—“not
the individual”—and the State never consented to arbitration. App., infra, 58a, 62a. Additionally, the Superior Court held that a PAGA claim could not be
“parse[d] out” into an arbitrable individual component
and a non-arbitrable representative component. Id.
at 62a. The Superior Court accordingly denied Uber’s
alternative request to compel arbitration of Gregg’s
alleged status as an aggrieved employee. Id. at 53a.
The California Court of Appeal affirmed. It likewise determined that no portion of Gregg’s PAGA
claim could be compelled to arbitration because the
claim was “indivisible and belong[ed] solely to the
state,” which (unlike Gregg) had not “agreed to arbitrate” with Uber. App., infra, 47a, 49a (emphasis
omitted).
13
The California Supreme Court denied Uber’s petition for review. App., infra, 39a.
After Uber petitioned for a writ of certiorari, this
Court decided Viking River, which invalidated the
anti-severability rule applied by the Court of Appeal.
Supra, at 9-10. This Court subsequently granted
Uber’s petition for a writ of certiorari, vacated the
Court of Appeal’s judgment, and remanded the case
for further consideration in light of Viking River. 142
S. Ct. 2860 (2022) (App., infra, 29a).
3. In this and other cases presenting the same issue, the California courts reached the opposite conclusion of this Court in Viking River: that a PAGA plaintiff can proceed on non-individual claims in court even
after the individual PAGA claim has been compelled
to arbitration.
On remand from this Court, the Court of Appeal
affirmed in part and reversed in part the denial of
Uber’s motion to compel arbitration. It held that
Gregg’s individual PAGA claim fell “squarely within
the Arbitration Provision’s scope” because it was
“based on Uber’s alleged misclassification of him as an
independent contractor (i.e., a ‘disput[e] arising out of
or related to [Gregg’s] relationship with [Uber]’).”
App., infra, 17a. As in Viking River, the Arbitration
Provision purported to waive non-individual PAGA
claims but also specified that the waiver should be
severed in the event of invalidity and that such severance “shall have no impact whatsoever on the Arbitration Provision or the [p]arties’ attempt to arbitrate
any remaining claims on an individual basis pursuant
to the Arbitration Provision.” Id. at 18a. The Court
of Appeal therefore concluded that “Gregg must resolve his individual PAGA claim in arbitration,” while
14
“his non-individual claims … must be litigated in
court.” Ibid.
The Court of Appeal also held that Gregg retained
standing under PAGA to bring non-individual claims
relating to other employees. It recognized that “to recover civil penalties under PAGA on behalf of other
employees, the plaintiff must: (1) have been employed
by the defendant; (2) have suffered one or more of the
Labor Code violations on which the PAGA claim is
based; and (3) seek to recover penalties for the violations he or she suffered in addition to penalties for violations suffered by other employees.” App., infra,
23a. But according to the Court of Appeal, Gregg “satisfie[d] these requirements,” even though he could no
longer litigate on behalf of himself in court, because
his standing could be aggregated across both forums.
Id. at 24a.
The Court of Appeal recognized that this Court in
Viking River had come to the opposite conclusion in
dismissing the non-individual PAGA claims for lack of
statutory standing. App., infra, 18a-19a. But, in its
view, Viking River rested entirely on this Court’s “understanding of state law,” which the Court of Appeal
was “ ‘not bound’ ” to follow, and did not separately
“hold that under the FAA, Gregg’s individual claim
must be ‘severed’ from his nonindividual claims.” Id.
at 24a-25a (citation omitted).
Rather than dismiss Gregg’s non-individual
PAGA claims, the Court of Appeal stayed them pending arbitration of his individual claim. App., infra,
27a.
Uber again sought review from the California Supreme Court, arguing that the Court of Appeal’s refusal to sever Gregg’s individual PAGA claim from the
15
non-individual claims impermissibly revived Iskanian’s preempted rule of compulsory claim joinder.
The California Supreme Court granted Uber’s petition
and deferred further action pending its decision in
Adolph, which presented the same question. App., infra, 2a.
In Adolph, the California Supreme Court granted
review shortly after Viking River to decide whether
“an aggrieved employee who has been compelled to arbitrate individual [PAGA] claims … maintains statutory standing to pursue non-individual PAGA claims
… in court.” 532 P.3d at 689 (quotation marks omitted). There, as here, a driver who had agreed to arbitrate disputes against Uber brought a PAGA action
alleging misclassification. Id. at 686.
Uber contended that both California law and the
FAA led to the same result that this Court reached in
Viking River: A plaintiff who agrees to arbitrate his
individual PAGA claim has no standing under California law and, more importantly, no way to prove his
standing consistent with the FAA. The California Supreme Court disagreed, reaching the same conclusion
as the Court of Appeal in this case for essentially the
same reasons.
As to California law, Uber argued (i) that a PAGA
plaintiff in a non-individual-only action lacks statutory standing because the non-individual claims in
court are brought only on behalf of “other current or
former employees” and not “on behalf of himself or
herself ” (Cal. Lab. Code § 2699(a)); and (ii) that a
plaintiff whose individual claim has been compelled to
arbitration has not suffered “one or more of the alleged violations” that are at issue in court (§ 2699(c)).
The California Supreme Court accepted the premise
that a PAGA plaintiff must bring an action “ ‘on behalf
16
of himself or herself and other current or former employees.’ ” Adolph, 532 P.3d at 694 (emphasis added)
(quoting Cal. Lab. Code § 2699(a)). It also acknowledged that PAGA actions are necessarily “comprised
of individual and non-individual claims.” Id. at 692.
But the California Supreme Court held that “an order
compelling arbitration of individual claims does not
strip the plaintiff of standing to litigate non-individual claims in court” on the theory that the initial filing
of the complaint with the individual claim (in violation of the arbitration agreement) “suffice[d] to confer
standing to bring a PAGA action.” Id. at 691-692. In
other words, the plaintiff could satisfy the PAGA
standing requirement by aggregating claims “ ‘across
two fora’” (arbitration and litigation). Id. at 694 (citation omitted).
Uber warned that this interpretation of California
law would be preempted by the FAA, as interpreted in
Viking River, as it would preclude “severing the two
components” of a PAGA action—the individual and
the non-individual—“into separate and distinct actions.” Adolph, 532 P.3d at 693; see Viking River, 142
S. Ct. at 1925 (holding that the FAA preempts “the
rule that PAGA actions cannot be divided into individual and non-individual claims”). The California Supreme Court, however, saw no conflict with Viking
River. It reasoned that, “[w]hen a case includes arbitrable and nonarbitrable issues, the issues may be adjudicated in different forums while remaining part of
the same action.” 532 P.3d at 693. It also disagreed
with Uber that Viking River held that “arbitrating individual claims effects a severance.” Id. at 693-694.
And it held that a trial court could comply with the
FAA by “exercis[ing] its discretion to stay the nonindividual claims pending the outcome of the arbitra-
17
tion” of the individual claim and then using the outcome of the arbitration to determine PAGA standing
in court for the non-individual claims. Id. at 692-693.
As long as “no such relitigation” of the individual
claim could occur, the California Supreme Court
thought that this Court’s dictates in Viking River
would be satisfied. Id. at 693.
4. Following its decision in Adolph, the California Supreme Court dismissed review in this case,
leaving the Court of Appeal’s decision in place. App.,
infra, 1a.
REASONS FOR GRANTING THE PETITION
The California courts have refused to faithfully
apply Viking River. While this Court held that the
FAA requires enforcement of severability provisions
that pare away an individual PAGA claim from the
non-individual ones, Adolph and the decision below
have reunited the separate proceedings into a single
multi-claim action and improperly kept a significant
portion of the individual claim in court, notwithstanding the parties’ agreement to arbitrate individualized
issues.
Given the need to safeguard this Court’s role under the Supremacy Clause as the final expositor of the
meaning of federal law, review is appropriate whenever a lower court refuses to apply this Court’s decisions. But this case also is exceptionally important on
its own terms. PAGA has become a vehicle to undermine arbitration agreements. And the decision below
is just the latest example of a long series of California
legal rules that are hostile to arbitration. This Court
should grant review and put a stop to the California
courts’ end-run of the FAA and Viking River.
18
I.
The California Supreme Court and Court
of Appeal Have Defied Viking River’s Interpretation of the FAA.
A. In Viking River, this Court held that where an
agreement requires disputes to be resolved on an individual basis, the FAA requires an individual PAGA
claim to be severed from any non-individual PAGA
claims. This holding represented a significant change
in existing law. Before Viking River, California courts
had interpreted PAGA “to contain what is effectively
a rule of claim joinder” that “allow[ed] a party to unite
multiple claims against an opposing party in a single
action.” 142 S. Ct. at 1915. Because “California law
prohibit[ed] division of a PAGA action into constituent
claims,” parties had to choose between arbitrating all
of the PAGA action or none of it. Id. at 1917.
This Court held that the FAA preempts the California rule that “preclude[d] division of PAGA actions
into individual and non-individual claims through an
agreement to arbitrate.” Viking River, 142 S. Ct. at
1923-1924. As this Court explained, “[t]his prohibition on contractual division of PAGA actions into constituent claims unduly circumscribes the freedom of
parties to determine ‘the issues subject to arbitration’
and ‘the rules by which they will arbitrate,’ and does
so in a way that violates the fundamental principle
that ‘arbitration is a matter of consent.’ ” Id. at 1923
(citations omitted). The Court put the dilemma this
way: “If the parties agree to arbitrate ‘individual’
PAGA claims based on personally sustained violations, Iskanian allows the aggrieved employee to abrogate that agreement after the fact and demand either judicial proceedings or an arbitral proceeding
that exceeds the scope jointly intended by the parties.”
19
Id. at 1924. This anti-severability rule thereby “compels parties to either go along with an arbitration in
which the range of issues under consideration is determined by coercion rather than consent, or else forgo
arbitration altogether”—two outcomes that both violated rights the parties “enjoy under the FAA.” Ibid.
In practice, “the effect” of California’s anti-severability rule was “to coerce parties into withholding
PAGA claims from arbitration” altogether. Viking
River, 142 S. Ct. at 1924. That is because “[t]he absence of ‘multilayered review’ in arbitra[tion]” makes
it “ ‘poorly suited to the higher stakes’ of massive-scale
disputes of this kind.” Ibid. (citations omitted). Iskanian thus nullified the benefits of arbitration’s
“quicker, more informal” procedures (Epic Systems,
138 S. Ct. at 1621), “effectively coerc[ing] parties to
opt for a judicial forum” even though the FAA gave
them the right to choose an arbitral one (Viking River,
142 S. Ct. at 1924).
This Court identified the proper remedy in Viking
River. To prevent California law from distorting the
issues submitted to arbitration, the FAA requires a
PAGA action to be “divided” into two separate actions
(a “pared away” individual claim and the other nonindividual claims) when the parties have agreed to arbitrate disputes on an individualized basis. 142 S. Ct.
at 1924-1925.
B. Viking River carried forward this Court’s
longstanding recognition that parties have the right
to determine the issues subject to—and not subject
to—arbitration and that the FAA mandates severance
to implement this right.
In First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938 (1995), this Court held that “a party can be
forced to arbitrate only those issues it specifically has
20
agreed to submit to arbitration.” Id. at 945. No less,
but also no more: The use of state law to expand the
scope of those issues violates the FAA. That was the
situation in Lamps Plus, where this Court held that
the positive right to decide “the issues subject to arbitration” also implied the negative right not to submit
a claim or issue (there, class claims) to arbitration “absent an affirmative ‘contractual basis for concluding
that the party agreed to do so.’ ” 139 S. Ct. at 1416
(quoting Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662, 684 (2010)).
Viking River also was not the first time that this
Court mandated severance under the FAA to implement a contractual agreement to arbitrate some issues but not others. On at least three prior occasions,
this Court has held that the FAA requires severance
when an action or claim contains both arbitrable and
non-arbitrable issues.
In Moses H. Cone, this Court considered what to
do when the FAA applies to only one of two related
disputes. The party opposing arbitration argued that
the motion to compel arbitration should be stayed
pending state-court litigation of a non-arbitrable
claim. 460 U.S. at 19-20. This Court acknowledged
that an order compelling arbitration would force the
party “to resolve these related disputes in different forums.” Id. at 20. But the FAA “requires piecemeal
resolution when necessary to give effect to an arbitration agreement.” Ibid. If the parties agreed to arbitrate only one claim, this Court explained, the “two
disputes will be resolved separately—one in arbitration, and the other (if at all) in state-court litigation.”
Ibid. (emphasis added).
This Court reaffirmed this rule in Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985). There, a
21
defendant moved to compel arbitration of state-law
claims but not of related federal securities claims. Id.
at 215. (This Court only later established that the
FAA applies to such securities claims. See Shearson/American Express, Inc. v. McMahon, 482 U.S.
220, 238 (1987).) The Ninth Circuit affirmed the district court’s denial of “the motion to sever and compel
arbitration of the pendent state claims.” Dean Witter,
470 U.S. at 215-216. But this Court reversed, explaining that the FAA requires such severance “even where
the result would be the possibly inefficient maintenance of separate proceedings in different forums.” Id.
at 217 (emphases added); see id. at 220-221 (holding
that “this conclusion is compelled” by Moses H. Cone).
The story was much the same in KPMG LLP v.
Cocchi, 565 U.S. 18 (2011) (per curiam), where the
Florida courts denied a motion to compel arbitration
because two of the plaintiffs’ four claims were not arbitrable. Id. at 20. Applying Dean Witter, this Court
reversed, remanded for the Florida courts to reconsider the motion to compel as to the arbitrable claims,
and acknowledged that the FAA sometimes requires
“ ‘separate proceedings in different forums.’ ” Id. at 22
(emphases added) (quoting Dean Witter, 470 U.S. at
217).
C. The approach taken by the California courts is
directly contrary to this unbroken line of precedent requiring the severance of arbitrable claims and non-arbitrable claims into separate actions under the FAA.
1. In the decision below, the California Court of
Appeal rejected Uber’s argument that the FAA requires the severance of the arbitrable portion of the
PAGA action from the non-arbitrable portion in court.
It asserted that this Court did not “hold that under
the FAA, [the plaintiff ’s] individual claim must be
22
‘severed’ from his nonindividual claims.” App., infra,
24a-25a. But that is exactly what this Court held:
The FAA preempts “the rule that PAGA actions cannot be divided into individual and non-individual
claims” and that the individual claims must be “pared
away” and “committed to a separate proceeding.” Viking River, 142 S. Ct. at 1925; accord Dean Witter, 470
U.S. at 217.
The Court of Appeal also nullified the parties’
right to decide which issues are arbitrated and which
issues are litigated. This Court held in Viking River
that the parties’ right to “determine ‘the issues subject
to arbitration’ ” cannot be circumvented by allowing
the plaintiff to both arbitrate and litigate his claimed
individual Labor Code violations. 142 S. Ct. at 1923
(citation omitted); see also Laver v. Credit Suisse Securities (USA), LLC, 976 F.3d 841, 846 (9th Cir. 2020)
(explaining that an arbitration agreement “ ‘is a promise to have a dispute heard in some forum other than
a court’ ”) (quoting Cohen v. UBS Financial Services,
Inc., 799 F.3d 174, 179 (2d Cir. 2015)). Again, this
Court implemented this right under the FAA by requiring that the individual claim be “committed to a
separate proceeding.” Viking River, 142 S. Ct. at
1925.
The decision below interferes with this federal
right. The Court of Appeal held that the key questions
the parties agreed to arbitrate—whether Gregg is an
employee and whether he suffered a Labor Code violation—remain in court for the purpose of determining whether Gregg has statutory standing, even if not
for the purpose of collecting a civil penalty for that violation. App., infra, 22a-23a. It did so despite recognizing that the arbitrator will determine whether
23
Gregg is an aggrieved employee. Id. at 26a. But instead of committing this individualized issue “to a separate proceeding” (Viking River, 142 S. Ct. at 1925),
the Court of Appeal stitched the arbitration and judicial proceeding together (App., infra, 22a-23a).
2. In Adolph, the California Supreme Court
adopted the same approach as the Court of Appeal in
this case, holding that the individual PAGA claim in
arbitration and non-individual claims in court “remai[n] part of the same action.” 532 P.3d at 693; see
also, e.g., Seifu v. Lyft, Inc., 89 Cal. App. 5th 1129,
1142 (2023) (rejecting argument that “sending the individual PAGA claim to arbitration ‘amounts to a form
of severance that yields two distinct actions in two distinct fora’ ”); Piplack v. In-N-Out Burgers, 88 Cal. App.
5th 1281, 1292 (2023) (“Even though Viking requires
the trial court to bifurcate and order individual PAGA
claims to arbitration … , the individual PAGA claims
in arbitration remain part of the same lawsuit as the
representative claims remaining in court.”). The California Supreme Court even endorsed the opinion in
this case. See Adolph, 532 P.3d at 691. Adolph—the
decision currently binding on the California judiciary—therefore conflicts with Viking River for the
same reasons as the decision below.
For the most part, the California Supreme Court
framed the question as whether California law requires severance. It ruled that “[n]othing in PAGA …
suggests that arbitrating individual claims effects a
severance” and that a different state-law provision—
California Code of Civil Procedure § 1281.4—“makes
clear that the cause remains one action” despite the
parties’ arbitration agreement. 532 P.3d at 693 (emphasis added). But Uber argued that the FAA itself
required severance consistent with the arbitration
24
agreement. As in Iskanian, the California Supreme
Court has again elevated California law over the dictates of the FAA.
Unlike the Court of Appeal, the California Supreme Court did propose additional procedures that
(it thought) would mitigate preemption concerns. It
first suggested that “the trial court may exercise its
discretion to stay the non-individual claims pending
the outcome of the arbitration pursuant to section
1281.4 of the [California] Code of Civil Procedure.”
532 P.3d at 692. It then reasoned that “[i]f the arbitrator determines that [the plaintiff] is an aggrieved
employee in the process of adjudicating his individual
PAGA claim, that determination, if confirmed and reduced to a final judgment, would be binding on the
court, and [the plaintiff] would continue to have
standing to litigate his non-individual claims.” Ibid.
(citing Cal. Civ. Proc. Code § 1287.4). By the same
token, “[i]f the arbitrator determines that [the plaintiff] is not an aggrieved employee and the court confirms that determination and reduces it to a final
judgment, the court would give effect to that finding,
and [the plaintiff] could no longer prosecute his nonindividual claims due to lack of standing.” Id. at 692693.
This stay-and-preclusion mechanism highlights,
rather than resolves, the underlying preemption violation because there would be no need for a stay if the
California courts had fully compelled the individual
claim to arbitration. The California Supreme Court
recognized that the FAA forbids relitigation of arbitral
issues but reasoned that a discretionary stay could
eliminate that possibility with respect to the question
whether a plaintiff is an aggrieved employee. 532
P.3d at 692-693. Even on its own terms, this proposal
25
leaves the parties’ federal rights under the FAA at the
mercy of the trial court’s discretion under California
statutes. Id. at 692. What was once a federal right
under Viking River is now a docket-management suggestion under Adolph.
The California Supreme Court also overlooked
that the FAA prevents not only relitigation of arbitrable claims in court but also state-law rules that distort
the scope (and thus the stakes) of arbitration. E.g.,
Concepcion, 563 U.S. at 350. Adolph violates this distinct strand of FAA preemption. In authorizing courts
to use arbitral findings when deciding standing for the
non-individual PAGA claims the parties did not agree
to arbitrate, the California Supreme Court transformed the formerly individualized arbitration into a
wide-ranging contest over all the claims (individual
and non-individual)—even though “ ‘[a]rbitration is
poorly suited to the higher stakes’ of massive-scale
disputes of this kind,” and even though the “absence
of ‘multilayered review’ in arbitral proceedings ‘makes
it more likely that errors will go uncorrected.’ ” Viking
River, 142 S. Ct. at 1924 (citation omitted). Under
California law as it stood before Viking River and as
it now stands after Adolph, the parties cannot agree
to submit only their individualized dispute to arbitration and therefore are “effectively coerce[d]” into a “judicial forum.” Ibid. “This result is”—and remains—
“incompatible with the FAA.” Ibid.
3. To be clear, Uber is not challenging the California courts’ interpretation of PAGA. Both the Court
of Appeal in this case and the California Supreme
Court in Adolph held that they were not bound by this
Court’s interpretation of California Labor Code
§ 2699. App., infra, 19a; Adolph, 532 P.3d at 689-690.
And that was correct, as far as it goes: “The highest
26
court of each State, of course, remains ‘the final arbiter of what is state law.’ ” Montana v. Wyoming, 563
U.S. 368, 377 n.5 (2011) (citation omitted); see also Viking River, 142 S. Ct. at 1925 (Sotomayor, J., concurring) (“[I]f this Court’s understanding of state law is
wrong, California courts, in an appropriate case, will
have the last word.”). But the Supremacy Clause
makes this Court the final arbiter of what is federal
law. Cooper v. Aaron, 358 U.S. 1, 18 (1958). So while
this Court did not have the final say on PAGA standing, the California courts certainly had a duty to follow the FAA holding in Viking River. See, e.g., NitroLift Technologies, LLC v. Howard, 568 U.S. 17, 21
(2012) (per curiam).
The California courts were stuck between California law and federal law. Without the California-law
requirement that a plaintiff must seek penalties for at
least one personally sustained violation in order to recover penalties on behalf of others, the non-individual
claim could have proceeded despite the individual
claim being compelled to arbitration. Yet the California courts understandably could not ignore the plain
text of California Labor Code § 2699. Viking River,
142 S. Ct. at 1925. But they balked at following that
standing requirement to its logical conclusion: that
“PAGA provides no mechanism to enable a court to
adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding.” Ibid. So the California courts took the path
of violating federal law, creating a workaround that
effectively resurrected the anti-severability rule that
Viking River held was preempted.
The California Supreme Court worried that severance under the FAA could “seriously impair the state’s
ability to collect and distribute civil penalties under
27
the provisions of [PAGA].” Adolph, 532 P.3d at 694.
This is not the first time that California courts have
defended arbitration-disfavoring rules on policy
grounds. E.g., Concepcion, 563 U.S. at 340. “But
States cannot require a procedure that is inconsistent
with the FAA, even if it is desirable for unrelated reasons.” Id. at 351.
If the law compels an outcome that makes for bad
policy, that is a problem for policymakers, not for
courts. Congress of course can revisit the FAA at any
time, and “the California Legislature” remains “free to
modify the scope of statutory standing under PAGA
within state and federal constitutional limits.” Viking
River, 142 S. Ct. at 1925-1926 (Sotomayor, J., concurring). But until such time, the California courts must
follow Viking River.
II. The Question Presented Is Exceptionally
Important.
A. This Court has not hesitated to intervene
when state courts have not faithfully applied this
Court’s decisions or have devised paper-thin grounds
to distinguish them. In Concepcion, for example, this
Court held that the FAA preempts a California judgemade rule prohibiting class-action waivers in arbitration agreements. 563 U.S. at 344. Shortly thereafter,
the California Court of Appeal refused to follow Concepcion on the theory that the parties had agreed to
apply invalid California law governing class waivers.
Even though the question presented affected only California, this Court again granted review and reaffirmed that “the California Court of Appeal must ‘enforc[e]’ the arbitration agreement” notwithstanding
the presence of a class waiver. DIRECTV, 577 U.S. at
59 (citation omitted; alteration in original). This case
28
similarly involves a creative state-court interpretation of the law that seeks to reinstate a prior result
despite this Court’s intervening decision.
This Court also has often summarily dealt with
state courts that have offered implausible grounds to
bypass this Court’s decisions, including in the context
of the FAA. E.g., Nitro-Lift, 568 U.S. at 21-22. When
the Oklahoma Court of Criminal Appeals took it upon
itself to declare that Booth v. Maryland, 482 U.S. 496
(1987), was no longer good law, this Court summarily
vacated the judgment and ordered the court to apply
Booth on remand. Bosse v. Oklahoma, 580 U.S. 1, 3
(2016) (per curiam). And when the Montana Supreme
Court held that Citizens United v. FEC, 558 U.S. 310
(2010), did not apply to Montana elections, this Court
summarily reversed, finding “no serious doubt” that
the state court must apply Citizens United under the
Supremacy Clause. American Tradition Partnership,
Inc. v. Bullock, 567 U.S. 516, 516-517 (2012) (per curiam). Summary reversal would be appropriate here
given the California Court of Appeal’s unwillingness
to sever Gregg’s individual claim and compel it to an
separate arbitral proceeding that does not become a
proxy war over the wide-ranging non-individual
claims.
B. This Court’s review is urgently needed in this
particular context as well. For years, Iskanian deprived defendants in PAGA actions of their rights under the FAA. This Court rectified that situation in Viking River. But barely more than a year later, the
California Supreme Court has already revived a version of the anti-severability rule and again coerced defendants to either forgo arbitration or submit to an ar-
29
bitration whose stakes vastly outstrip the individualized issues and procedures envisioned by the arbitration agreement.
The California courts’ workaround to Viking River
has real-world consequences. From 2004 to 2023,
PAGA actions increased by more than 1,000%. See
Ashley Hoffman, Private Attorneys General Act, CalChamber
Advocacy
(Jan.
2023),
https://tinyurl.com/2teu2fu4. And that growth has continued
apace. The California Labor Workforce Development
Agency expects to receive an all-time high of over
7,000 filed notices this year. See Anthony Zaller, The
High Stakes and Risks of California’s Private Attorneys General Act (PAGA), California Employment
Law
Report
(May
26,
2023),
https://tinyurl.com/3m42f6u4. Although proponents defended
PAGA based on the agency’s opportunity to screen
claims, the agency in practice rarely investigates. See
CABIA Foundation, California Private Attorneys General Act of 2004: Outcomes and Recommendations 12
(Mar. 2021), https://tinyurl.com/3pbjem9v.
When the agency fails to investigate (as is typical),
the plaintiff automatically gains the ability to litigate
on behalf of the State—and demand extortionate settlements from small businesses that benefit neither
employees nor the State, but only plaintiffs’ lawyers.
See, e.g., Ken Monroe, Frivolous PAGA Lawsuits Are
Making Some Lawyers Rich, But They Aren’t Helping
Workers or Employees, L.A. Times (Dec. 6, 2018),
https://tinyurl.com/ycysr6t6; Rich Peters, SoCal Company Hit with PAGA Lawsuit: ‘Purely a Shakedown on
Businesses’, Southern California Record (Feb. 18,
2020), https://tinyurl.com/2p9fmdtm. These suits include numerous claims for alleged technical errors in
workers’ pay stubs, such as shortening “Company” in
30
the employer’s name to “Co.” See, e.g., Mejia v. Farmland Mutual Insurance Co., 2018 WL 3198006, at *6
(E.D. Cal. June 26, 2018). If these suits ever reach
trial, they become unwieldy for courts and parties
given the huge number of workers at issue. See, e.g.,
Wesson v. Staples the Office Superstore, LLC, 68 Cal.
App. 5th 746, 773 (2021) (PAGA action involving only
346 workers “would require a trial spanning several
years with many hundreds of witnesses”).
Arbitration is cheaper for the parties and reduces
burdens on the judicial system. See U.S. Dep’t of Justice, Updated Guidance Regarding the Use of Arbitration and Case Selection Criteria (Nov. 12, 2020),
https://tinyurl.com/2x3mz287. And studies show that
arbitration provides consumers and employees with a
better chance to win, higher awards, and quicker outcomes. Nam D. Pham & Mary Donovan, Fairer,
Faster, Better III: An Empirical Assessment of Consumer and Employment Arbitration 4-15 (Mar. 2022),
https://tinyurl.com/2r2uer2b.
The decisions below and in Adolph not only deprive the parties and society of these benefits, but also
create a roadmap to evade the FAA that could be reproduced in other States. Shortly before Viking River,
nearly half a dozen state legislatures introduced bills
to authorize actions similar in structure to PAGA. See
Charles Thompson et al., Employers Must Brace for
PAGA-Like Bills Across US, Law360 (June 18, 2021),
https://tinyurl.com/3fntcmse. Left untouched, California’s post-Viking River decisions provide a path for
States to once again “coerc[e]” parties “into giving up
a right they enjoy under the FAA.” Viking River, 142
S. Ct. at 1924.
California has long been a hotbed for hostility to
arbitration. This Court’s FAA preemption decisions
31
are a roll call of since-invalidated California statutes
and judge-made rules. See, e.g., Viking River, 142 S.
Ct. at 1923-1924; Lamps Plus, 139 S. Ct. at 1422; DIRECTV, 577 U.S. at 58; Concepcion, 563 U.S. at 340;
Preston, 552 U.S. at 359; Perry, 482 U.S. at 491;
Southland, 465 U.S. at 10. If the California courts are
able to roll back Viking River, that may embolden further incursions on the FAA at a time when the resistance to enforcing arbitration agreements that motivated its enactment a century ago has come back
with a vengeance.
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted.
ANDREW M. SPURCHISE
SOPHIA B. COLLINS
LITTLER MENDELSON, P.C.
900 Third Avenue
New York, NY 10022
JOSEPH E. BARAKAT
GIBSON DUNN & CRUTCHER LLP
2001 Ross Avenue, Suite 2100
Dallas, TX 75201
(214) 698-3301
THEANE D. EVANGELIS
Counsel of Record
BLAINE H. EVANSON
BRADLEY J. HAMBURGER
ALEXANDER N. HARRIS
PATRICK J. FUSTER
GIBSON, DUNN & CRUTCHER LLP
333 South Grand Avenue
Los Angeles, CA 90071
(213) 229-7000
tevangelis@gibsondunn.com
Counsel for Petitioners
December 12, 2023
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.