By: Phillip J. Ebsworth and Justin T. Curley
Seyfarth’s Wage Hour Litigation practice group is excited to share this inaugural post in our new series, PAGA Paraphrased. The everchanging world of PAGA is full of verbose opinions, unwieldy statutory language, and a unique and sometimes perplexing vocabulary that even an exasperated United States Supreme Court expressed confusion over. Whether you deal with PAGA on a regular basis, you are new to this area of law, or somewhere in between, PAGA Paraphrased is a resource to keep you informed with straightforward and easy to understand updates.
Over the next couple of weeks we will provide updates on the recent Court of Appeals cases that have considered whether plaintiffs whose individual claims have been compelled to arbitration maintain standing to pursue the representative PAGA claims in Court. Then, we will keep you informed on developments as and when they happen including connecting you with Seyfarth’s more substantial PAGA analysis on the bigger developments in the field.
We hope you find these updates helpful and do not hesitate to reach out to our authors if you ever need a longer explanation.
Seyfarth Synopsis: The Fifth Appellate District provided its prediction for the California Supreme Court’s decision in Adolph v. Uber Technologies, expected later this year. The first appellate authority addressing whether plaintiffs maintain standing after their individual PAGA claims have been compelled to arbitration comes out in favor of plaintiffs and disavows Viking River’s conclusion that plaintiffs lose standing, in turn, compelling dismissal of the representative PAGA claims.
This decision first introduces “Type A” and “Type O” claims into the PAGA lexicon. “Type A” is used for a claim seeking to recover a civil penalty imposed because of a Labor Code violation suffered by the plaintiff. The Court labelled these claims “Type A” because this type of PAGA claim will be ordered to arbitration if it is covered by an arbitration agreement. “Type O” is used for a claim seeking to recover a civil penalty imposed because of a Labor Code violation suffered by an employee other than the plaintiff—“O” taken from the word “other”.
The Court concluded that a plaintiff compelled to arbitrate their Type A claims retains standing to pursue their Type O claims in state court. In doing so, the Court “predict[ed] that [the] California Supreme Court will conclude that California law does not prohibit an aggrieved employee from pursuing Type O claims in court once the Type O claims are separated from the Type A claims ordered to arbitration. The reason for this prediction is simple—it is the interpretation of PAGA that best effectuates the statute’s purpose, which is ‘to ensure effective code enforcement.’” The Court also adopted the reasoning in Gavriiloglou v. Prime Healthcare Management, Inc. and concluded that Type A and Type O claims litigate two separate rights thus, California’s general rule against splitting a cause of action is not violated as Type A claims and Type O claims are not based on the same “primary right.”