89 Cal.App.5th 786
Cal. Ct. App.2023Background:
- Johnathon Gregg signed Uber’s Technology Services Agreement (TSA) in 2016, which included an Arbitration Provision requiring individual arbitration and a PAGA waiver; he did not timely opt out.
- Gregg sued Uber under PAGA alleging misclassification as an independent contractor and sought civil penalties on behalf of himself and other current/former drivers.
- Uber moved to compel arbitration and enforce the TSA’s PAGA waiver; the trial court denied the motion and an appellate panel affirmed before the U.S. Supreme Court granted certiorari and remanded after Viking River.
- The TSA’s Arbitration Provision carved out “representative action[s] brought on behalf of others under PAGA” and contained a severance clause for any unenforceable part of the PAGA waiver.
- Applying Viking River and California law, the court held the TSA’s PAGA waiver is invalid and severable; Gregg must arbitrate his individual PAGA claim, while his non‑individual (representative) PAGA claims must be litigated in court but stayed pending arbitration.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the TSA’s PAGA waiver | Gregg: waiver unenforceable under Iskanian and must be entirely invalid | Uber: waiver enforceable to require arbitration of individual PAGA claim and bar representative suits | PAGA waiver invalid to the extent it strips representative standing; it must be severed from the Arbitration Provision |
| Whether Gregg’s individual PAGA claim must be arbitrated | Gregg: severance language and carve‑out require entire PAGA action litigated in court | Uber: Arbitration Provision (post‑severance) requires arbitration of individual claims | Held for Uber: Gregg must arbitrate his individual PAGA claim under the Arbitration Provision |
| Whether non‑individual (representative) PAGA claims must be dismissed or litigated | Gregg: he retains standing to litigate representative claims in court even if individual claim is arbitrated | Uber: following Viking River, non‑individual claims lose standing and should be dismissed | Held for Gregg on standing: non‑individual claims are not dismissed now; they must be litigated in court but stayed pending arbitration |
| Effect of arbitration on PAGA standing and procedural posture | Gregg: arbitrating his individual claim does not strip statutory standing to pursue representative penalties in court | Uber: severance/arbitration severs the action and PAGA standing falls away per Viking River | Held for Gregg: under California law (Kim and related authorities) arbitrating the individual claim does not automatically deprive him of PAGA standing to pursue non‑individual claims in court; those claims are stayed, not dismissed |
Key Cases Cited
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) (contracts cannot require employees to waive representative PAGA claims)
- Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022) (FAA does not preempt rule invalidating waivers of representative PAGA standing but preempts rule forbidding contractual division of PAGA into individual vs non‑individual claims)
- Kim v. Reins Int’l California, Inc., 9 Cal.5th 73 (2020) (PAGA standing requires only employment by alleged violator and that one or more violations were committed against the plaintiff)
- Olabi v. Neutron Holdings, Inc., 50 Cal.App.5th 1017 (2020) (construed a PAGA carve‑out as removing the entire PAGA action from arbitration — discussed and declined to follow)
- Johnson v. Maxim Healthcare Servs., Inc., 66 Cal.App.5th 924 (2021) (PAGA standing exists even if the plaintiff’s individual claim is time‑barred; settlement does not erase prior violations)
- Rocha v. U‑Haul Co. of California, 88 Cal.App.5th 65 (2023) (discusses interaction of arbitration outcomes and PAGA standing)