Court Opinion

ID: 6330274
Source: CourtListenerOpinion
Date Created: 2022-04-12 23:03:12.657068+00
Date Added: 2024-06-11T09:22:59.207183
License: Public Domain

Filed 4/11/22 Adolph v. Uber Technologies CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

 ERIK ADOLPH,

      Plaintiff and Respondent,                                        G059860 (consol. w/ G060198)

           v.                                                          (Super. Ct. No. 30-2019-01103801)

 UBER TECHNOLOGIES, INC.,                                              OPINION

      Defendant and Appellant.

                   Appeals from orders of the Superior Court of Orange County, Kirk H.
Nakamura, Judge. Affirmed.
                   Littler Mendelson, Andrew Spurchise, Sophia Behnia, and Anthony Ly for
Defendant and Appellant.
                   Desai Law Firm, Aashish Y. Desai, Maria Adrianne De Castro; Goldstein,
Borgen, Dardarian & Ho, Andrew Paul Lee and Mengfei Sun for Plaintiff and
Respondent.
                                      INTRODUCTION
               A claim under the Labor Code Private Attorneys General Act of 2004,
Labor Code section 2698 et seq. (PAGA), may only be brought by an “aggrieved
employee.” (Lab. Code, § 2699, subd. (a).) Plaintiff Erik Adolph contends that Uber
Technologies, Inc. (Uber) misclassified employees as independent contractors and seeks
civil penalties against Uber under PAGA. Before he began working for Uber, Adolph
signed an arbitration agreement, under the terms of which all disputes between them are
to be resolved in arbitration and which purported to waive Adolph’s right to assert a
PAGA claim. The California Supreme Court has held, however, that PAGA claims are
not subject to arbitration and that an agreement waiving the right to bring a representative
claim under PAGA violates public policy and is unenforceable. (Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 384 (Iskanian).) Based on
Iskanian and the cases following it, the trial court denied Uber’s petition to compel
arbitration.
               Uber contends on appeal that the initial question of whether Adolph is an
employee—who may bring a representative PAGA claim—or an independent
contractor—who may not—must be determined in arbitration. We disagree. California
case law is clear that the threshold issue of whether a plaintiff is an aggrieved employee
in a PAGA case is not subject to arbitration. Therefore, we affirm.
                            FACTS AND PROCEDURAL HISTORY
               Adolph was a driver for UberEATS, a meal delivery service. The company
through which drivers are connected with those in need of UberEATS’ services is owned
by Uber. Before he began making deliveries for UberEATS in March 2019, Adolph
created an account to use the UberEATS app. In creating his account, Adolph accepted
an arbitration agreement, which “is governed by the Federal Arbitration Act,” and which
“applies to any dispute, past, present or future, arising out of or related to this Agreement
or formation or termination of the Agreement and survives after the Agreement

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terminates.” The parties do not dispute the terms of the arbitration agreement or that
Adolph accepted the arbitration agreement.
              The arbitration agreement contains a waiver of all representative PAGA
claims, whether in court or in arbitration. It also provides that the validity of the PAGA
waiver may only be resolved in court, not through arbitration, and that if the PAGA
waiver is found to be unenforceable, the litigation of PAGA claims must be stayed
pending the outcome of arbitrable individual claims.
              In October 2019, Adolph filed a putative class action complaint against
Uber, claiming that Uber had misclassified employees as independent contractors, and
had therefore failed to reimburse the class members for necessary work expenses. The
complaint alleged two causes of action: (1) violation of Labor Code section 2802, and
(2) violation of Business and Professions Code section 17200. Uber filed a petition to
compel arbitration of Adolph’s individual claims, strike the class action allegations, and
stay all court proceedings. The parties stipulated to allow Adolph to file a first amended
complaint adding a third cause of action for civil penalties under PAGA.
              After the amended complaint was filed, Uber filed a renewed petition to
compel arbitration. The trial court granted the petition compelling arbitration of
Adolph’s individual claims in the first two causes of action, found that the class claims on
the first two causes of action were waived, and stayed the PAGA cause of action.
              Adolph then filed a motion for leave to file a second amended complaint,
which would include only the PAGA cause of action, and a motion for preliminary
injunction to prevent the arbitration from proceeding. The trial court granted both
motions. Uber filed a notice of appeal from the order granting the preliminary injunction,
appeal No. G059860.
              Adolph filed the second amended complaint alleging a single cause of
action under PAGA. Uber filed a petition to compel arbitration of Adolph’s independent
contractor status and of all issues of enforceability or arbitrability. The petition requested

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that the PAGA claim be stayed pending arbitration on the threshold issue of whether
Adolph was an aggrieved employee entitled to assert the PAGA claim. Adolph both
opposed and moved to strike the petition. The trial court denied the petition to compel
arbitration, and Uber filed a notice of appeal, appeal No. G060198.
              This court granted the parties’ joint motion to consolidate appeal
Nos. G059860 and G060198.
                                        DISCUSSION
I. Standard of Review
              Because the evidence is not in conflict, we review the order denying a
petition to compel arbitration de novo. (Banc of California, National Assn. v. Superior
Court (2021) 69 Cal.App.5th 357, 367.) The trial court’s order granting a preliminary
injunction is reviewed for abuse of discretion. (Hunt v. Superior Court (1999) 21
Cal.4th 984, 999; Olson v. Hornbrook Community Services Dist. (2021) 68 Cal.App.5th
260, 268.)
II. The Federal Arbitration Act
              The Federal Arbitration Act (9 U.S.C. § 1 et seq.) (FAA) “establishes ‘a
liberal federal policy favoring arbitration agreements.’” (Epic Systems Corp. v. Lewis
(2018) 584 U.S. ___ [138 S.Ct. 1612, 1621] (Epic).) By its terms, the FAA applies to
any “written provision in . . . a contract evidencing a transaction involving commerce to
settle by arbitration a controversy” and makes those provisions “valid, irrevocable, and
enforceable.” (9 U.S.C. § 2.) The arbitration provision in the agreement between Adolph
and Uber provides that it is to be governed by the FAA, and the agreement
unquestionably involves commerce. The FAA is therefore implicated in this case.
III. Under California Law, PAGA Claims Are Not Arbitrable
              In California, PAGA authorizes an employee to bring an action for civil
penalties against his or her employer on behalf of the state for violations of the Labor
Code. The California Supreme Court has held that because a PAGA claim is brought on

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behalf of the state, which is not a signatory to the employment agreement, a PAGA claim
is not subject to any arbitration agreement between the employee and the employer,
despite the FAA’s broad terms. “[A] PAGA claim lies outside the FAA’s coverage
because it is not a dispute between an employer and an employee arising out of their
contractual relationship. It is a dispute between an employer and the state, which alleges
directly or through its agents—either the Agency or aggrieved employees—that the
employer has violated the Labor Code.” (Iskanian, supra, 59 Cal.4th at pp. 386-387.)
“[A] PAGA representative action necessarily means that this claim cannot be compelled
to arbitration based on an employee’s predispute arbitration agreement absent some
evidence that the state consented to the waiver of the right to bring the PAGA claim in
court.” (Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 624-625
(Correia).) There is no evidence or argument that the state of California has consented to
arbitrate the PAGA claim in this case.
              In Epic, the United States Supreme Court held that class action waivers in
arbitration agreements are enforceable. (Epic, supra, 138 S.Ct. at p. 1619.) The plaintiff
employee in that case was pursuing FLSA and California overtime claims on a class-wide
basis. (Id. at p. 1620.) Numerous courts have held that Iskanian survives Epic because
“the cause of action at issue in Epic differs fundamentally from a PAGA claim.”
(Correia, supra, 32 Cal.App.5th at p. 619.) “Although the Epic court reaffirmed the
broad preemptive scope of the Federal Arbitration Act [citation], Epic did not address the
specific issues before the Iskanian court involving a claim for civil penalties brought on
behalf of the government and the enforceability of an agreement barring a PAGA
representative action in any forum. We thus conclude the trial court properly ruled the
waiver of representative claims in any forum is unenforceable.” (Id. at p. 609; see
Contreras v. Superior Court (2021) 61 Cal.App.5th 461, 471-472; Olson v. Lyft, Inc.
(2020) 56 Cal.App.5th 862, 872; Tanguilig v. Bloomingdale’s, Inc. (2016) 5 Cal.App.5th
665, 673.) We see no reason to diverge from clear California authority in this case.

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IV. Whether Adolph Is Entitled to Assert PAGA Claims Against Uber Must Be Decided
by the Court, Not an Arbitrator
              California cases uniformly hold that whether a plaintiff is an aggrieved
employee who may assert a PAGA claim is a matter to be decided by the court, not by an
arbitrator, even if the parties signed an arbitration agreement. In Provost v.
YourMechanic, Inc. (2020) 55 Cal.App.5th 982, the defendant company sought to require
the plaintiff to arbitrate whether he was an employee or an independent contractor before
proceeding with a representative PAGA claim, based on the parties’ arbitration
agreement. (Id. at p. 987.) The appellate court rejected the defendant company’s
argument: “[T]hreshold issues involving whether a plaintiff is an ‘aggrieved employee’
for purposes of a representative PAGA-only action cannot be split into individual
arbitrable and representative nonarbitrable components.” (Id. at p. 996.) The court also
held that, because the state is the real party in interest in a PAGA claim, such a claim
cannot be ordered to arbitration without the state’s consent, despite any arbitration
agreement between the nominal plaintiff and the defendant. (Id. at pp. 997-998.)
              Contreras v. Superior Court, supra, 61 Cal.App.5th 461 reached the same
conclusion, holding that PAGA claims cannot be sent to arbitration without the state’s
consent (id. at p. 472), and that the preliminary question of whether the plaintiff is an
employee or an independent contractor must be decided by the court, not an arbitrator (id.
at pp. 473-475).
              Uber argues these cases were decided improperly. Uber contends that
PAGA is not a true qui tam statute, and the state is not actually the real party in interest.
“‘Traditionally, the requirements for enforcement by a citizen in a qui tam action have
been (1) that the statute exacts a penalty; (2) that part of the penalty be paid to the
informer; and (3) that, in some way, the informer be authorized to bring suit to recover
the penalty.’” (Iskanian, supra, 59 Cal.4th at p. 382.) The Iskanian court held that
although a portion of the penalty goes to all the employees affected by the employer’s

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violation rather than only to the “‘informer,’” a PAGA claim still meets all the elements
of a qui tam action. (Ibid.) Uber cites Magadia v. Wal-Mart Associates, Inc. (9th Cir.
2021) 999 F.3d 668, 676, in which the Ninth Circuit held a PAGA claim is not a true qui
tam action. However, Magadia was addressing standing under Article III of the United
States Constitution, not the arbitrability of the status of an aggrieved employee, and it is
therefore not instructive here. We disagree that California courts have erred in
concluding that a PAGA claim is outside the FAA because it is not a dispute between an
employer and an employee arising out of an arbitration provision in the employment
agreement.
              Uber also contends that Iskanian and the cases following it improperly
obstruct the FAA’s objective to promote arbitration. Uber asks this court to reconsider
those cases because the United States Supreme Court’s reasoning in Epic that arbitration
agreements must be enforced according to their terms (Epic, supra, 138 S.Ct. at p. 1619)
is “equally applicable” to the PAGA claim in the present action. Uber fails to note,
however, that its own arbitration provision treats PAGA claims differently than any other
type of claim. The arbitration provision in Uber’s agreement with Adolph purports to
waive all representative PAGA claims, gives the courts the exclusive jurisdiction to
consider whether the waiver is valid, and requires that any PAGA claims be resolved in
court and not in arbitration. Although the arbitration provision does not explicitly grant
to the courts the authority to determine whether a PAGA claimant is an aggrieved
employee, the provision’s retention of all other authority over a PAGA claim in the court
makes this a fair inference.
              The issue whether a plaintiff’s status as an aggrieved employee of Uber
should be decided by the court or an arbitrator was decided against Uber in Rosales v.
Uber Technologies, Inc. (2021) 63 Cal.App.5th 937. The court in Rosales relied on the
opinions in Provost v. YourMechanic, Inc., supra, 55 Cal.App.5th 982 and Contreras v.
Superior Court, supra, 61 Cal.App.5th 461, and held that Uber’s arguments did not

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compel the court to depart from those authorities. (Rosales v. Uber Technologies, Inc.,
supra, at p. 942.)
              Uber cites several federal cases in support of its argument that the issue of
arbitrability should have been decided by an arbitrator, rather than the court. (See Ali v.
Vehi-Ship, LLC (N.D.Ill., Nov. 27, 2017, No. 17 CV 02688) 2017 U.S.Dist. Lexis
194456; Richemond v. Uber Technologies, Inc. (S.D.Fla. 2017) 263 F.Supp.3d 1312,
1317; Lamour v. Uber Technologies, Inc. (S.D.Fla., Mar. 1, 2017, No. 1:16-CIV-21449-
Martinez/Goodman) 2017 U.S.Dist. Lexis 29706.) Uber also cites cases in which the
courts decided that issues of misclassification of an employee must be resolved before
substantive issues can be addressed. (See Johnston v. Uber Technologies, Inc. (N.D.Cal.,
Sep. 16, 2019, No. 16-cv-03134-ECM) U.S.Dist. Lexis 161256; Sakyi v. Estee Lauder
Companies, Inc. (D.D.C. 2018) 308 F.Supp.3d 366, 382; Ali v. Vehi-Ship, LLC, supra;
Lamour v. Uber Technologies, Inc., supra.) In addition to being counter to California
authority, these cases address the arbitrability and enforceability of an arbitration clause
against a claim under the federal National Labor Relations Act or other federal law, not
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California’s PAGA.
              The United States Supreme Court heard arguments on March 30, 2022, in
the case of Viking River Cruises, Inc. v. Angie Moriana, case no. 20-1573 (Viking). In
Viking, employee Moriana signed an arbitration provision before starting work for Viking

1
                Uber also cites Mohamed v. Uber Technologies, Inc. (9th Cir. 2016) 848
F.3d 1201 for the proposition that the arbitration provision applies to the determination of
all arbitrability questions. But Uber fails to fully cite the case. The full quote (a part of
which is cited on page 34 of appellant’s opening brief), reads: “The 2014 Agreement
clearly and unmistakably delegated the question of arbitrability to the arbitrator under all
circumstances. Neither delegation provision was unconscionable. Thus, all of Plaintiffs’
challenges to the enforceability of the arbitration agreement, save Gillette’s challenge to
the enforceability of the PAGA waiver in the 2013 Agreement, should have been
adjudicated in the first instance by an arbitrator and not in court.” (Id. at p. 1208, italics
added.) That opinion also reads: “The question of arbitrability as to all but Gillette’s
PAGA claims was delegated to the arbitrator.” (Id. at p. 1206.)

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River Cruises. The provision required arbitration of any dispute arising out of her
employment, and prohibited class or representative actions or private attorney general
proceedings. Moriana later brought a single PAGA claim against Viking River Cruises;
the trial court denied Viking River Cruises’s petition to compel an individualized
arbitration, the appellate court affirmed, and the California Supreme Court denied a
petition for review. The question presented by the petition for writ of certiorari is:
“Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration
agreement providing that an employee cannot raise representative claims, including under
PAGA.”
              The Viking petition seemingly acknowledges how this court must rule in
the present case given the current state of the law: “The time is right for this Court to put
an end to this unfairness by reviewing and rejecting the Iskanian rule. The decision
below and its refusal to budge in light of Epic make clear that no matter how clearly this
Court underscores the importance of the FAA and enforcing parties’ agreements to
arbitrate bilaterally, the California courts will stick with Iskanian unless and until this
Court directs them otherwise. Only this Court can check California’s insistence that there
is something special about representative PAGA actions that places them outside the
scope of [AT&T Mobility LLC v.] Concepcion [(2011) 563 U.S. 333], outside the scope of
Epic, and outside the scope of the FAA.”
              Unless and until the United States Supreme Court or the California
Supreme Court directly overrules it, the courts of this state must follow the rule of
Iskanian (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455), which
establishes that the trial court did not err by concluding that the initial issue of whether
Adolph can pursue a PAGA claim as an aggrieved employee must be decided by the trial
court, not an arbitrator.

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                                    DISPOSITION
            The orders are affirmed. Respondent to recover costs on appeal.

                                              O’LEARY, P. J.

WE CONCUR:

MOORE, J.

GOETHALS, J.

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