Amicus Curiae Brief — Uber Technologies, Inc., et al., Petitioners v. Johnathon Gregg

No. 23-645

IN THE

Supreme Court of the United States

______________________

UBER TECHNOLOGIES, INC., ET AL.,

Petitioners,

v.

JOHNATHON GREGG,

Respondent.

______________________

On Petition for a Writ of Certiorari

to the California Court of Appeal

______________________

BRIEF OF EMPLOYERS GROUP AS AMICUS

CURIAE IN SUPPORT OF PETITIONERS

______________________

ANTON METLITSKY

O’MELVENY & MYERS LLP

7 Times Square

New York, NY 10036

RYAN RUTLEDGE

ADRIANNA GUIDA

O’MELVENY & MYERS LLP

610 Newport Center Drive

Newport Beach, CA 92660

ADAM J. KARR

JASON ZARROW

Counsel of Record

O’MELVENY & MYERS LLP

400 South Hope Street

Los Angeles, CA 90071

(213) 430-6000

jzarrow@omm.com

Attorneys for Amicus Curiae

i

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURIAE .......................... 1

INTRODUCTION AND SUMMARY OF THE

ARGUMENT ......................................................... 2

ARGUMENT ............................................................. 5

I. THE DECISION BELOW CONFLICTS

WITH VIKING RIVER ........................................ 6

II. CALIFORNIA’S CIRCUMVENTION OF

VIKING RIVER REINSTATES ALL THE

HARMS THAT DECISION SHOULD

HAVE FORECLOSED ....................................... 10

CONCLUSION ........................................................ 18

ii

TABLE OF AUTHORITIES

Page(s)

Cases:

Adolph v. Uber Techs., Inc.,

532 P.3d 682 (Cal. 2023) ................................... 8, 9

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) .............................. 1-2, 4, 6, 13

Bernstein v. Virgin Am., Inc.,

2020 WL 10618569 (N.D. Cal. Jan.

21, 2020) .............................................................. 13

Bernstein v. Virgin Am., Inc.,

3 F.4th 1127 (9th Cir. 2021) ............................... 13

Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213 (1985) ............................................... 2

DIRECTV, Inc. v. Imburgia,

577 U.S. 47 (2015) ................................................. 6

Epic Sys. Corp. v. Lewis,

138 S. Ct. 1612 (2018)........................................... 6

Fox v. Cares Cmty. Health,

2023 WL 6538410 (Cal. Super. Ct.

July 27, 2023) ...................................................... 17

Gunther v. Alaska Airlines, Inc.,

72 Cal. App. 5th 334 (2021) ................................ 13

Iskanian v. CLS Transp. L.A., LLC,

59 Cal. 4th 348 (2014)........................................... 6

Lamps Plus, Inc. v. Varela,

139 S. Ct. 1407 (2019)........................................... 6

iii

TABLE OF AUTHORITIES

(continued)

Page(s)

Moreno v. M&J Seafood Co.,

2023 WL 6538411 (Cal. Super. Ct.

Aug. 23, 2023) ..................................................... 16

Nordstrom Comm’n Cases,

186 Cal. App. 4th 576 (2010) .............................. 16

Perry v. Thomas,

482 U.S. 483 (1987) ............................................... 6

Preston v. Ferrer,

552 U.S. 346 (2008) ........................................... 1, 6

Ramsey v. Packaging Corp. of Am.,

2023 WL 9116636 (Cal. Super. Ct.

Nov. 17, 2023) ..................................................... 17

Reed v. CVS Pharmacy, Inc.,

2019 WL 12314054 (Cal. Super. Ct.

Oct. 30, 2019) ...................................................... 13

Sam v. Concordance Healthcare Sols. LLC,

2023 WL 6467612 (Cal. Super. Ct. Aug.

4, 2023) ................................................................ 17

Southland Corp. v. Keating,

465 U.S. 1 (1984) ................................................... 6

Viceral v. Mistras Grp., Inc.,

2016 WL 5907869 (N.D. Cal. Oct. 11, 2016) ...... 16

Viking River Cruises, Inc. v. Moriana,

596 U.S. 639 (2022) ............................... 1-4, 6-9, 13

iv

TABLE OF AUTHORITIES

(continued)

Page(s)

Volt Info. Scis., Inc. v. Bd. of Trs. of

Leland Stanford Junior Univ.,

489 U.S. 468 (1989) ............................................... 2

Statutes:

9 U.S.C. § 1 ................................................................. 1

Cal. Lab. Code § 2699(a) ............................................ 3

Cal. Lab. Code § 2699(c) ............................................ 3

Cal. Lab. Code § 2699(f)(2)....................................... 12

Cal. Lab. Code § 2699(i) ........................................... 15

Rules:

S. Ct. R. 10(c) ............................................................ 10

Other Authorities:

California Private Attorneys General Act

of 2004, CABIA Found. (Oct. 2021) .................... 12

Emily Green, State Law May Serve As

Substitute for Employee Class

Actions, Daily J. (Apr. 17, 2014)......................... 12

Erin Coe, Iskanian Ruling to Unleash

Flood of PAGA Claims, Law360

(June 24, 2014).................................................... 11

Ken Mashinchi, Grove and Salas

Contend that PAGA Lawsuits Are

Killing Kern County Businesses,

ABC 23 News (Sept. 6, 2016) ............................. 14

v

TABLE OF AUTHORITIES

(continued)

Page(s)

Ken Monroe, Another Voice: It’s Time to

Repeal PAGA Now. The Fate of Small

Businesses Hinges On It, Sacramento

Bus. J. (Oct. 14, 2021)......................................... 15

Ken Monroe, Op-Ed: Frivolous PAGA

Lawsuits are Making Some Lawyers

Rich, But They Aren’t Helping Workers

or Employers, L.A. Times (Dec. 6, 2018) ............ 14

Maureen A. Weston, The Clash: Squaring

Mandatory Arbitration with

Administrative Agency and Representative

Recourse, 89 S. Cal. L. Rev. 103 (2015) .............. 11

Michael J. Nader & Zachary V. Zagger,

No COVID-19 Slowdown for

California PAGA Filings: The Data

Is In, 12 Nat’l L.R. 198 (2023) ............................ 13

Robyn Ridler Aoyagi & Christopher J.

Pallanch, The PAGA Problem: The

Unsettled State of PAGA Law Isn’t

Good for Anyone, 2013-7 Bender’s

Cal. Lab. & Emp. Bull. (2013) ............................ 11

Tim Freudenberger et al., Trends in

PAGA Claims and What It Means

for California Employers, Inside

Counsel (Mar. 19, 2015)...................................... 11

INTEREST OF AMICUS CURIAE

The Employers Group is the nation’s oldest and

largest human resources management organization

for employers. It represents California employers of

all sizes in many different industries, which collectively employ millions of employees. The Employers

Group seeks to enhance the predictability and fairness of the laws and decisions regulating employment

relationships.1

Having participated as an amicus curiae in Viking

River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022),

see Br. of Emp’rs Grp. as Amicus Curiae in Support of

Pet’r (No. 20-1573), the Employers Group is uniquely

positioned to assess both the impact and implications

of California’s rejection of that decision. See also Br.

of Emp’rs Grp. as Amicus Curiae in Support of Pet’rs,

Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (No.

16-285); Br. of Emp’rs Grp. as Amicus Curiae in Support of Appellant, Adolph v. Uber Techs., Inc., 532

P.3d 682 (Cal. 2023) (No. S274671). Indeed, the decision below and similar decisions from California

courts are just the latest in a long line of California

cases flouting the Federal Arbitration Act (“FAA”), 9

U.S.C. § 1, et seq., and this Court’s jurisprudence regarding arbitration. See, e.g., AT&T Mobility LLC v.

Concepcion, 563 U.S. 333 (2011); Preston v. Ferrer,

552 U.S. 346 (2008). The Employers Group has a

1 No counsel for any party authored this brief in whole or in part,

and no entity or person other than amicus and its counsel made

any monetary contribution toward the preparation or submission of this brief. Amicus timely notified all parties of its intent

to file this brief.

2

strong interest in ensuring that this Court’s arbitration precedents are respected.

INTRODUCTION AND

SUMMARY OF THE ARGUMENT

Congress enacted the FAA in 1925 “to overrule the

judiciary’s longstanding refusal to enforce agreements to arbitrate.” Dean Witter Reynolds, Inc. v.

Byrd, 470 U.S. 213, 219-20 (1985). The “principal

purpose of” the FAA is “ensuring that private arbitration agreements are enforced according to their

terms.” Volt Info. Scis., Inc. v. Bd. of Trs. of Leland

Stanford Junior Univ., 489 U.S. 468, 478 (1989).

Giving effect to that purpose—and in response to

the fact that the “judicial hostility towards arbitration

that prompted the FAA” has continued to “manifest[]

itself in a great variety of devices and formulas,” Concepcion, 563 U.S. at 342 (quotations omitted)—this

Court has repeatedly invalidated state rules that undermine agreements to arbitrate. Many such rules

have emanated from California. This case represents

yet another attempt by California to circumvent the

FAA and this Court’s precedent enforcing it.

Two Terms ago, this Court held in Viking River

that California law was preempted insofar as it prevented employees from agreeing to arbitrate “individual” claims under the California Labor Code Private

Attorneys General Act (“PAGA”)—i.e., “claims based

on code violations suffered by the plaintiff.” 596 U.S.

at 649. Under Viking River, where an employee and

employer agree to arbitrate PAGA claims on an individual basis, the employee’s individual PAGA claim

must be “pared away” from the remainder of the

3

“PAGA action” and “committed to a separate proceeding.” Id. at 663.

Almost immediately after Viking River was decided, California courts, including the court below, rejected that rule. California Labor Code § 2699(a) authorizes “an aggrieved employee on behalf of himself

or herself and other current or former employees” to

assert a claim under PAGA. Section 2699(c), in turn,

defines an aggrieved employee as a person “against

whom one or more of the alleged [Labor Code] violations was committed.” Thus, to assert other employees’ Labor Code violations under PAGA, a plaintiff

must also assert an individual PAGA claim. In the

decision below, the California Court of Appeal held

that an employee could use his individual PAGA

claim as a toehold to assert other employees’ PAGA

claims notwithstanding the fact that he agreed to arbitrate his individual claim. Under Viking River, that

should have been impossible. The arbitrable individual claim should have been “pared away” from the

rest of the “PAGA action” and “committed to a separate proceeding.” 596 U.S. at 663. And without an

individual PAGA claim to litigate in court, Plaintiff

should have been left without standing to assert

PAGA claims for others.

The Court of Appeal avoided that straightforward

result by holding that Viking River did not mean what

it said. According to the court below, Viking River did

not hold that plaintiff’s “individual claim must be ‘severed’ from his nonindividual claim.” Pet. App. 24a25a. Thus, the court reasoned, the plaintiff’s individual claim could remain in court, while also in arbitra-

4

tion as a placeholder establishing his standing to litigate other employees’ PAGA claims. Id. Yet Viking

River is directly to the contrary. Under Viking River,

a plaintiff who agreed to arbitrate individually cannot

“maintain[] an individual claim in [a PAGA] action”

because that claim must be “pared away” from the

rest of the action and “committed to a separate proceeding”—in other words, severed. 596 U.S. at 663.

This Court should grant certiorari once again to bring

California in line with its FAA precedents.

California’s decision to thwart Viking River has

real practical consequences—consequences that Viking River should have foreclosed. It is well known

that “representative” PAGA claims seeking workforce-wide penalties create a massive “risk of ‘in terrorem’ settlements.” Concepcion, 563 U.S. at 350. As

the Court observed in Viking River, PAGA’s penalties

are individually “modest; but given PAGA’s additive

dimension, low-value claims may easily be welded together into high-value suits.” 596 U.S. at 647. In the

years before Viking River, PAGA claims seeking millions of dollars in penalties had skyrocketed, as enterprising plaintiffs (and their counsel) used PAGA actions as a procedural sleight of hand to avoid agreements to arbitrate bilaterally. These lawsuits, like

class actions, exerted enormous settlement pressure

against businesses large and small—many relying on

aggregate penalties for technical Labor Code violations—forcing them to pay up or take a bet-the-business gamble.

And it was not only large employers who were the

targets of such threats—small businesses were, too,

and it takes much less to exert this sort of settlement

5

pressure on smaller businesses that simply cannot afford to take that gamble. One California small business owner, for example, was subject to a PAGA suit

seeking $30 million in penalties because her business’s paychecks listed the date the check was issued,

instead of the dates the check covered (i.e., 9/6/16 instead of 9/1/16-9/6/16)—truly a technical violation.

Another small business spent over $100,000 in attorney’s fees to respond to a letter asserting PAGA violations sent from a law firm that filed over 800 similar

claims. Small businesses obviously cannot withstand

the sort of pressure imposed by even the threat of

these kinds of suits, given the draconian penalties

that are possible because of PAGA’s scheme for aggregating penalties. Viking River should have foreclosed

shakedown litigation of this sort. But because California has rejected Viking River, it continues unabated. Yet again, this Court’s intervention is necessary.

ARGUMENT

This Court should grant certiorari to resolve a

clear conflict between California law and this Court’s

recent decision in Viking River. Viking River invalidated under the FAA a California rule prohibiting employees from agreeing to arbitrate individual PAGA

claims—i.e., claims for California Labor Code violations they personally suffered. Under Viking River,

where the parties agree to arbitrate bilaterally, individual PAGA claims must be pared away from nonindividual claims and compelled to a separate arbitral

proceeding. California has rejected that rule. And not

only does California law now conflict with Viking

River, but it lets in through the back door all the

6

harms this Court in Viking River ushered out the

front.

I. THE DECISION BELOW CONFLICTS WITH

VIKING RIVER

California has long exhibited an intense hostility

to arbitration, and this Court has long rejected California’s efforts to evade the strictures of the FAA. See,

e.g., Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407

(2019); Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612

(2018); Concepcion, 563 U.S. at 342; DIRECTV, Inc. v.

Imburgia, 577 U.S. 47 (2015); Preston, 552 U.S. at

346; Perry v. Thomas, 482 U.S. 483 (1987); Southland

Corp. v. Keating, 465 U.S. 1 (1984). In the most recent

iteration of this long-running battle about the supremacy of federal law, this Court invalidated a mandatory “claim joinder” rule inconsistent with parties’

freedom to determine which claims will—or will not—

be subject to arbitration. Viking River, 596 U.S. at

660.

In Iskanian v. CLS Transportation Los Angeles,

LLC, 59 Cal. 4th 348 (2014), the California Supreme

Court had held that California law “invalidates agreements to arbitrate only ‘individual PAGA claims for

Labor Code violations that an employee suffered.’”

Viking River, 596 U.S. at 659 (quoting Iskanian, 59

Cal. 4th at 383). “This prohibition on contractual division of PAGA actions into constituent claims,” this

Court held in Viking River, violated the FAA because

it “unduly circumscribe[d] the freedom of parties to

determine the issues subject to arbitration and the

rules by which they will arbitrate,” in contravention

of “the fundamental principle that arbitration is a

matter of consent.” Id. at 659-60 (quotations omitted).

7

Under Iskanian, “[t]he only way for parties to agree

to arbitrate one of an employee’s PAGA claims [wa]s

to also ‘agree’ to arbitrate all other PAGA claims in

the same arbitral proceeding.” Id. at 661. But the

FAA ensures that the “parties … control which claims

are subject to arbitration,” id. at 660, including

whether arbitration should encompass asserted statutory violations by all employees (as under Iskanian)

or just the employee bringing suit (as under Viking

River).

The Court thus 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.” Id. at 662.

Where, as in Viking River, the parties agree to arbitrate the employee’s PAGA claim individually, that

individual claim must be “pared away” from the nonindividual PAGA claims (i.e., those asserting Labor

Code violations sustained by other employees) and

“committed to a separate proceeding,” namely, arbitration. Id. at 663. Under Viking River, a plaintiff is

prevented from “maintaining an individual claim [in

a PAGA] action” where he or she agreed to arbitrate

that individual claim. Id.

California decisions, including the decision below,

conflict directly with that rule. Contrary to Viking

River’s mandate that individual PAGA claims be

“pared away” from non-individual claims and “committed to a separate proceeding,” California courts

have held that individual PAGA claims remain in the

litigation, tethered to the non-individual PAGA

claims as the predicate for statutory standing to assert those non-individual claims.

8

The decision below is a perfect example. Under

PAGA, a plaintiff has standing to litigate a claim,

whether individual or non-individual, only by proving

that he or she personally is an “aggrieved employee”—

i.e., an employee against whom one or more Labor

Code violation was committed. Id. at 644. Plaintiff

agreed to arbitrate his “individual” claim that he was

aggrieved by a Labor Code violation. Yet the Court of

Appeal nonetheless permitted him to assert other employees’ PAGA claims on the ground that he maintained an individual claim in litigation, Pet. App. 22a24a, even though Viking River concluded that, by virtue of his arbitration agreement, he was barred from

“maintaining an individual claim in that action,” 596

U.S. at 663. To avoid this obvious conflict, the Court

of Appeal asserted that Viking River did not “hold

that under the FAA, Gregg’s individual claim must be

‘severed’ from his nonindividual claims.” Pet. App.

24a-25a. But that is exactly what this Court said.

Where an employee agrees to arbitrate his individual

PAGA claim, that claim must be “pared away” from

the non-individual claims and “committed to a separate proceeding.” 596 U.S. at 663.

The California Supreme Court committed the

same error in Adolph v. Uber Technologies, Inc., 532

P.3d 682 (Cal. 2023). Adolph held that the plaintiff’s

individual PAGA claim endowed him with standing to

litigate non-individual PAGA claims because the individual PAGA claim “remain[ed] part of the same action,” even after it had been compelled to arbitration.

Id. at 693. But Viking River made clear that paring

away an individual claim and committing it to a separate arbitral proceeding meant that the plaintiff

9

could not “maintain[] an individual claim” as part of

the non-individual PAGA litigation. 596 U.S. at 663.

Contrary to the California Supreme Court’s decision,

individual and non-individual PAGA claims are not

forever fused together; under Viking River, they can

and must be “divided.” Id. at 662.

The California Supreme Court believed that its rejection of Viking River would not impose practical

hardships on the parties because trial courts have discretion to stay litigation pending arbitration and can

give preclusive effect to an arbitrator’s decision on an

individual PAGA claim—if an employee wins in arbitration, he’ll be an aggrieved employee with standing

to litigate non-individual PAGA claims, and if he loses

in arbitration, he won’t be. Adolph, 532 P.3d at 692.

As Uber observes (Pet. 24-25), this discretionary stayand-preclusion workaround only underscores the

problems with California law. These procedures

would have been unnecessary had the court simply

followed Viking River, and a discretionary stay is

hardly protective of a federal right in any case. But

setting these points aside, the court’s preclusion solution raises the stakes of individual arbitration far beyond what parties contemplate, in contravention of

the FAA’s rule that party consent is key. Under California law as it stands now, arbitration of an employee’s individual PAGA claim decides not only that

claim but also whether collective litigation—often

worth tens millions of dollars, infra Part II, can proceed. Nominally “individual” arbitration, in other

words, is the PAGA equivalent of a class certification

proceeding.

10

It does not matter for preemption purposes that

California substantive law permits a plaintiff whose

individual PAGA claim has been committed to arbitration to litigate non-individual claims. In fact,

that’s the preemption problem. As explained, the

predicate for standing to assert non-individual PAGA

claims under California law is the plaintiff’s claim

that he or she personally suffered a Labor Code violation—in other words, the plaintiff’s individual PAGA

claim. Only by maintaining an individual PAGA

claim as part of the litigation does a plaintiff have

standing to assert non-individual PAGA claims. But

Viking River says that a plaintiff who agreed to arbitrate bilaterally may not maintain an individual

PAGA claim in the court action asserting non-individual claims. In this respect, Viking River’s application

of the FAA must control.

This Court should grant certiorari to ensure the

supremacy of this federal law and because California

case law conflicts squarely with “relevant decisions of

this Court.” S. Ct. R. 10(c). Indeed, the conflict with

Viking River is so clear that this Court may choose to

dispose of California’s contrary rule through summary reversal. See Pet. 28.

II. CALIFORNIA’S

CIRCUMVENTION

OF

VIKING RIVER REINSTATES ALL THE

HARMS THAT DECISION SHOULD HAVE

FORECLOSED

Certiorari was warranted in Viking River in the

absence of a conflict among lower courts given the

massive harms that California’s anti-arbitration policies imposed on California employers, including amicus’s members. Those harms are well documented.

11

The stakes of non-individual PAGA litigation are tremendous, and PAGA’s statutory claim-aggregation

procedures invite abuse and coerce exorbitant settlements. Viking River should have abated these harms,

but California’s decision not to follow Viking River has

reinstated them.

A. Before Iskanian, PAGA claims were an afterthought, asserted, if at all, on “the coattails of traditional class claims,” because the requirement that

plaintiffs turn over 75 percent of their recovery to the

State made PAGA less attractive. See Robyn Ridler

Aoyagi & Christopher J. Pallanch, The PAGA Problem: The Unsettled State of PAGA Law Isn’t Good for

Anyone, 2013-7 Bender’s Cal. Lab. & Emp. Bull. 1-2

(2013). But PAGA actions seeking penalties on behalf

of other employees skyrocketed in the wake of Iskanian as employees (and lawyers) sought to circumvent Concepcion and evade their agreements to bilaterally arbitrate PAGA claims. See, e.g., Maureen A.

Weston, The Clash: Squaring Mandatory Arbitration

with Administrative Agency and Representative Recourse, 89 S. Cal. L. Rev. 103, 127-28 (2015) (plaintiffs

have turned to PAGA as “a means … to avoid arbitration”); Tim Freudenberger et al., Trends in PAGA

Claims and What It Means for California Employers,

Inside Counsel (Mar. 19, 2015) (in the wake of Concepcion, PAGA has become “a particularly attractive

vehicle for plaintiffs’ attorneys to bring claims against

employers that instituted mandatory arbitration

agreements”); Erin Coe, Iskanian Ruling to Unleash

Flood of PAGA Claims, Law360 (June 24, 2014) (similar).

12

Data on the volume of PAGA litigation proves the

point. In 2005, the year after PAGA was enacted,

plaintiffs filed 759 PAGA notices—the precursor to

litigation required by the statute. See Emily Green,

State Law May Serve As Substitute for Employee

Class Actions, Daily J. (Apr. 17, 2014). By 2013, in

the aftermath of Concepcion but prior to Iskanian,

that number had already increased to 3,137. Id. After Iskanian, the number predictably continued to

grow. In fiscal years 2018-19 and 2019-20, 5,916 and

6,942 PAGA notices were filed, respectively, with the

California Labor and Workforce Development

Agency. California Private Attorneys General Act of

2004 at 8, CABIA Found. (Oct. 2021); see infra at 16

(post-Viking River case count).2

B. The danger with PAGA is not just in the volume

of litigation but also its stakes. In each PAGA action,

the amount of civil penalties available is enormous. If

a PAGA plaintiff proves that her employer violated

the Labor Code, civil penalties are assessed against

the employer in many circumstances in the amount of

“one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two

hundred dollars ($200) for each aggrieved employee

per pay period for each subsequent violation.” Cal.

Lab. Code § 2699(f)(2). Multiply these penalties by

the number of employees, and the amount of PAGA

penalties can jump into the millions, even for a small

employer, fast.

2 https://cabiafoundation.org/app/uploads/2021/11/CABIA_PA-

GA-Report-2021.pdf.

13

This concern is not hypothetical. PAGA suits asserting non-individual claims on behalf of other employees often exert “unacceptable” pressure on defendants to settle, due to the “small chance of a devastating loss.” Concepcion, 563 U.S. at 350; see also

Viking River, 596 U.S. at 647. Many PAGA settlements and judgments illustrate this point. Examples

abound: Bernstein v. Virgin Am., Inc., 3 F.4th 1127,

1145 (9th Cir. 2021) (affirming $24.9 million in PAGA

civil penalties, as stated in Bernstein v. Virgin Am.,

Inc., 2020 WL 10618569, at *2 (N.D. Cal. Jan. 21,

2020)); Brown v. Wal-Mart Stores, Inc., No. 5:09-cv03339-EJD (N.D. Cal.) (approving $65 million settlement in a PAGA suitable-seating action); Gunther v.

Alaska Airlines, Inc., 72 Cal. App. 5th 334, 348 (2021)

(awarding $25 million in PAGA penalties (reversed on

appeal)); Reed v. CVS Pharmacy, Inc., 2019 WL

12314054 (Cal. Super. Ct. Oct. 30, 2019) (approving

$19.5 million settlement in a PAGA suitable-seating

action); see infra at 16-17 (post-Viking River settlements).

C. The devastating effects of PAGA suits are especially salient for small businesses, because a far

smaller litigation risk would be sufficient to coerce defendants into settlement.3 A few examples illustrate

the point: California Assembly Member and small

3 See Michael J. Nader & Zachary V. Zagger, No COVID-19 Slowdown for California PAGA Filings: The Data Is In, 12 Nat’l L.R.

198 (2023), https://www.natlawreview.com/article/no-covid-19slowdown-california-paga-filings-data (noting that although

PAGA notice filings increased from fiscal year 2018-19 to 202021, the filings against large employers decreased, “suggesting

that plaintiffs’ counsel are focusing more on small and mid-size

companies with their PAGA filings.”).

14

business owner Shannon Grove was subject to a

PAGA suit claiming $30 million in penalties, which

she ultimately settled for just under half a million dollars. The $30 million price tag came from Grove’s purported failure to issue paychecks with inclusive

dates—for instance, the paycheck listed the date the

check was issued, instead of the dates for the pay period that the check covered (i.e., 9/6/16 instead of

9/1/16-9/6/16). The violation: trivial; potential penalties: massive.4

Ken Monroe, the owner of a family-owned business

that sells construction equipment, described being

subject to a PAGA suit for allowing employees to decide when to take their lunch breaks, instead of adhering to state law requiring that hourly employees

be provided a half-hour meal period after five hours of

work. “As I learned the hard way,” Monroe wrote,

“these penalties can add up fast, easily reaching hundreds of thousands of dollars for a small company like

ours (and millions for larger businesses).” And “[l]ike

virtually all companies that find themselves the target of a PAGA or class-action lawsuit,” Monroe’s business “negotiated a settlement rather than take the

risk of losing in court and facing the onerous maximum penalties prescribed by the law.”5

4 See Ken Mashinchi, Grove and Salas Contend that PAGA Lawsuits Are Killing Kern County Businesses, ABC 23 News (Sept. 6,

2016), https://www.turnto23.com/news/local-news/grove-and-s

alas-contend-that-paga-lawsuits-are-killing-kern-county-businesses.

5 See Ken Monroe, Op-Ed: Frivolous PAGA Lawsuits are Making

Some Lawyers Rich, But They Aren’t Helping Workers or Employers, L.A. Times (Dec. 6, 2018), https://www.latimes.com/

15

Another small business owner had received a letter asserting various PAGA violations from a law firm

that filed over 800 similar claims. “They throw those

accusations at you and expect you to defend yourself

and just bury you in paperwork. We’ve already spent

well north of $100,000 in attorney fees and that

doesn’t include all the staff time to audit all the payroll records and time sheets,” the business owner

said.6

D. No one benefits from this shakedown litigation—including the state of California. Although, in

theory, 75 percent of any recovery in a PAGA action

goes to the State, see Cal. Lab. Code § 2699(i), plaintiffs’ attorneys routinely receive a third of PAGA settlements, and can elect to allocate an even smaller

amount as PAGA penalties. Consider, for example, a

$10 million settlement in a PAGA case. One might

think that the State would recover $7.5 million, but

that is hardly how it works in practice. Instead, the

plaintiffs’ attorneys will immediately take $3.3 million off the top. Of the remaining $6.7 million, attorneys will generally allocate only a small portion, say

$500,000, to the PAGA claim, while the rest may be

allocated to the class-action settlement for the underlying California Labor Code violations (even if the

plaintiffs have signed enforceable class-action waivers). The result of these procedural machinations is

opinion/op-ed/la-oe-monroe-paga-small-businesses-20181206story.html.

6 See Ken Monroe, Another Voice: It’s Time to Repeal PAGA Now.

The Fate of Small Businesses Hinges On It, Sacramento Business

Journal (Oct. 14, 2021), https://www.bizjournals.com/sacramento/news/2021/10/14/paga-family-business-association.html.

16

that of a $10 million settlement, the State will receive

only a pittance: $375,000. Again, this scenario is not

hypothetical; this is exactly how PAGA litigation

plays out in real life. See, e.g., Viceral v. Mistras Grp.,

Inc., 2016 WL 5907869, at *2 (N.D. Cal. Oct. 11, 2016)

(allocating $20,000 of a $6 million settlement to the

PAGA claim); Nordstrom Comm’n Cases, 186 Cal.

App. 4th 576, 580 (2010) (affirming a settlement allocating $0 of an approximately $9 million settlement

to the PAGA claim).

E. Viking River should have put an end to this

shakedown litigation. Supra Part I. But since Viking

River, the flow of PAGA actions has continued unabated. In the year preceding Viking River, plaintiffs

filed more than 6,500 PAGA notices. PAGA Case

Search, Cal. Dep’t of Indus. Relations (June 1, 2021 to

July 1, 2022). 7 For the same time period following

Viking River, plaintiffs filed more than 7,000 notices.

Id. (June 1, 2022 to July 1, 2023). And the California

Supreme Court’s recent decision in Adolph has

opened the floodgate, even further. In the roughly

half-year since that case was decided, plaintiffs filed

more than 4,000 PAGA notices, a nearly 30 percent

increase over the same period the year before. Id.

(July 18, 2023 to Jan. 11, 2024).

Same as before, PAGA is being used to extort settlements from employers large and small for technical

(at best) violations of California law. To take one example, consider Moreno v. M&J Seafood Co., 2023 WL

6538411 (Cal. Super. Ct. Aug. 23, 2023). There, the

7 https://cadir.my.salesforce-sites.com/PagaSearch/.

17

parties recently settled plaintiffs’ California Labor

Code claims for $750,410 with just $20,000 allocated

to plaintiffs’ PAGA claims, and more than $250,000

allocated to class counsel. As mentioned above,

Moreno’s settlement structure is by no means

unique—and it continues to be utilized. See also, e.g.,

Ramsey v. Packaging Corp. of Am., 2023 WL 9116636

(Cal. Super. Ct. Nov. 17, 2023) (nearly $975,000 settlement of Labor Code claims with $80,000 allocated

to PAGA claims and $325,000 allocated to class counsel); Sam v. Concordance Healthcare Sols. LLC, 2023

WL 6467612 (Cal. Super. Ct. Aug. 4, 2023) ($450,000

settlement of Labor Code claims with $67,500 allocated to PAGA claims and $150,050 allocated to class

counsel); Fox v. Cares Cmty. Health, 2023 WL

6538410 (Cal. Super. Ct. July 27, 2023) ($770,000 settlement, with $70,000 allocated to PAGA claims and

$269,500 allocated to class counsel).

Viking River should have brought this type of litigation to an end where the employee agreed to arbitrate bilaterally. But as these and many other cases

illustrate, by disregarding Viking River, California

has undermined the supremacy of federal law, and in

the process entrenched these significant harms for its

employers.

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CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

ANTON METLITSKY

O’MELVENY & MYERS LLP

7 Times Square

New York, NY 10036

RYAN RUTLEDGE

ADRIANNA GUIDA

O’MELVENY & MYERS LLP

610 Newport Center Drive

Newport Beach, CA 92660

ADAM J. KARR

JASON ZARROW

Counsel of Record

O’MELVENY & MYERS LLP

400 South Hope Street

Los Angeles, CA 90071

(213) 430-6000

jzarrow@omm.com

Counsel for Amicus Curiae

January 16, 2024