CALIFORNIA SUPREME COURT

Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104

Law Finance Group LLC v. Key,14 Cal. 5th 932

Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104

Adolph, an Uber EATS driver, sued Uber, alleging that it violated the Labor Code by not reimbursing him for business expenses because it improperly designated him as an independent contractor. Subsequently, Adolph filed a representative PAGA claim. The court granted Uber’s motion to compel arbitration and dismissed the representative claim. Adolph filed an amended complaint wherein he dismissed the individual claim. The trial court denied Uber’s second motion to compel arbitration of Adolph’s claims and granted Adolph’s motion to enjoin arbitration of the individual claim.

Uber appealed and the Court of Appeal affirmed. Uber appealed to the California Supreme Court. In the interim, Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022) was decided by the United States Supreme Court. That decision made the individual claim arbitrable and so the sole issue was whether to follow the court’s directive that the nonindividual claim should be dismissed in a case of this nature. The California Supreme Court declined to do so, following the Court of Appeals decisions decided subsequent to Viking River.

The court held that a worker becomes an “aggrieved employee” with standing to litigate claims on behalf of fellow employees upon sustaining a Labor Code violation committed by his or her employer. Standing under PAGA is not affected by enforcement of an agreement to adjudicate a plaintiff's individual claim in another forum. Arbitrating a PAGA plaintiff's individual claim does not nullify the fact of the violation or extinguish the plaintiff's status as an aggrieved employee. The operative complaint here alleged that Adolph experienced Labor Code violations while driving for Uber. Adolph's allegations that Labor Code violations were committed against him while he was employed by Uber sufficed to confer standing to bring a PAGA action.

Uber made several arguments in urging that a PAGA plaintiff loses standing to litigate nonindividual claims in court when the plaintiff's individual claims are subject to arbitration. None were persuasive. First, Uber contended that unless Adolph's non-individual claims were dismissed, his PAGA action would run afoul of Viking River because he would be permitted to relitigate whether he was an aggrieved employee in court to establish standing even if he agreed to resolve that issue in arbitration as part of his individual PAGA claim. The court reasoned that this would not occur because the trial court could stay the non-individual claims pending the outcome of the arbitration pursuant to section 1281.4 of the Code of Civil Procedure. If the arbitrator determined that Adolph was not an aggrieved employee and the trial court confirmed that determination and reduced it to a final judgment, the court would give effect to that finding, and Adolph could no longer prosecute his non-individual claims due to lack of standing. Rocha v. U-Haul Co. of California, infra.

Next, Uber contended that bifurcating individual and non-individual components of a PAGA claim into arbitration and court proceedings has the effect of severing the two components into separate and distinct actions, and each of the resulting two actions must independently satisfy PAGA's standing requirements. Because the non-individual claim no longer sought penalties for Labor Code violations sustained by the plaintiff, he could not satisfy PAGA's standing requirements. But the court held that nothing in PAGA or any other relevant statute suggested that arbitrating individual claims effects a severance. When a case includes arbitrable and non-arbitrable issues, the issues may be adjudicated in different forums while remaining part of the same action. Further, Uber's interpretation ran counter to the statutory scheme. PAGA was designed to authorize aggrieved employees to pursue enforcement actions on behalf of themselves and their current and former coworkers. Under Uber's reading, an aggrieved employee who signed a predispute agreement to arbitrate individual claims would no longer be able to bring suit on behalf of himself or herself and other current or former employees.

Uber also argued that PAGA contains a third standing requirement—the action must “be … brought by an aggrieved employee on behalf of himself or herself and other current or former employees” and that Adolph could not satisfy this requirement with respect to nonindividual claims upon being compelled to arbitrate individual claims. The court responded that even if it were to agree with Uber's reading of the statute, Adolph would have standing. Adolph filed a PAGA complaint seeking recovery on behalf of himself and other current or former employees. Even though Viking River required the trial court to bifurcate and order individual PAGA claims to arbitration when an appropriate arbitration agreement existed, the individual PAGA claims in arbitration remained part of the same lawsuit as the nonindividual claims remaining in court. Thus, Adolph was pursuing a single PAGA action on behalf of himself and other current or former employees, albeit across two fora.

Uber contended that a PAGA plaintiff must have a financial stake in the outcome of the case and that if an arbitrator granted an award to the plaintiff based on his or her personally sustained violations, the plaintiff would lose standing to litigate non-individual claims because he or she had no financial stake in those claims. But, for purposes of standing, the statute does not require a PAGA plaintiff who has alleged one or more personally sustained violations to seek civil penalties for those violations in the same forum as the litigation of non-individual claims. It is plaintiff's status as an aggrieved employee, not the redressability of any injury the plaintiff may have suffered, that determines the availability of PAGA standing.

Finally, Uber argued that a PAGA plaintiff, upon arbitrating personally sustained Labor Code violations, stands in no different position than a member of the general public with regard to non-individual claims. The court noted that in order to curb abusive litigation, the Legislature designed PAGA standing to be narrower than general public standing. An“aggrieved employee” under PAGA is not merely a member of the general public. An “aggrieved employee” is an individual who worked for the alleged violator and personally sustained at least one Labor Code violation.

Law Finance Group LLC v. Key,14 Cal. 5th 932Law Finance Group (LFG) prevailed in an arbitration with Key. After the award was issued, LFG indicated that it planned to file a motion to confirm the award, while Key indicated that she planned to file a motion to vacate. LFG filed its motion within two weeks of the award. Subsequently, the parties agreed in writing to an extension of time within which Key could file a motion to vacate and response to the motion to confirm. Key filed the motion to vacate 130 days after the award was issued and a response to the motion to confirm 139 days after the award was issued. The response to the motion to confirm also asked that the award be vacated. The trial court held that the motion to vacate was untimely pursuant to CCP Section 1288, but nevertheless granted Key’s motion and denied LFG’s motion because CCP Section 1290.6 allows an extension of the 10-day deadline for a response if the parties agree to an extension in writing. LFG appealed and the Court of Appeal reversed, holding that Section 1288 is jurisdictional and cannot be extended.

Key appealed to the Supreme Court, which agreed that Section 1288 is jurisdictional. Under the plain terms of sections 1288 and 1288.2, Key had 100 days from the service of the final award to request that the arbitration award be vacated. Key's argument that her 139-day filing was nonetheless timely depended on the proposition that section 1290.6—a general statutory provision permitting parties to extend the default 10-day period for any responsive filing in an arbitration matter—superseded the specific 100-day deadline for requesting that an arbitration award be vacated, at least when a petition to confirm has been filed within 100 days of the award's service. But under the governing statutes, neither deadline supersedes the other. On the contrary, when a filing both (1) responds to a petition to confirm, and (2) requests that the arbitration award be vacated, both deadlines apply: (1) Absent a written agreement or court order, the response must be filed within 10 days after service of the petition to confirm and (2) in any event, no later than 100 days after service of the award. This rule respects the plain language of both provisions without reading an unnecessary conflict into the statutory scheme.

However, the court remanded the matter to the Court of Appeal to determine if equitable estoppel tolled the time within which Key could have filed the motion to vacate. Although Section 1288 is jurisdictional, the term “jurisdiction” has many different meanings. LFG's jurisdictional argument in this case concerned what the courts call “fundamental” jurisdiction. A lack of fundamental jurisdiction is an entire absence of power to hear or determine the case, an absence of authority over the subject matter or the parties. Because a lack of fundamental jurisdiction implicates the basic power of a court to act, courts must enforce jurisdictional limitations even if considerations of waiver, estoppel, consent, or forfeiture might otherwise excuse a party's failure to comply with them. In other words, when a party fails to comply with a jurisdictional time bar, the court has no choice but to dismiss the case for lack of jurisdiction, even if equitable concerns would support reaching the merits. Because of those harsh consequences, courts apply a presumption that statutes do not limit the courts' fundamental jurisdiction absent a clear indication of legislative intent to do so. This approach reflects a preference for the resolution of litigation and the underlying conflicts on their merits by the judiciary. But the court declined to assume that the Legislature intended to imbue a time bar with jurisdictional consequences merely because the statute spoke in mandatory terms. Jurisdictional rules are mandatory, but mandatory rules are not necessarily jurisdictional. To establish that a particular filing deadline is jurisdictional, more is required. Our Legislature must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional in the fundamental sense. Here, nothing in section 1288's instructions for the timing of responses requesting vacatur clearly indicates the Legislature's intent to remove a class of cases from the court's fundamental jurisdiction. Section 1288 speaks only to obligations of the litigants and makes no reference at all to the power of the courts—in other words, the section reads as an ordinary statute of limitations.

[NOTE: See also discussion of Folke v. Pulliam, infra.]