CA Appellate Court Rejects Uber’s Arbitration Agreement for PAGA Claims

A California appellate court has upheld the decision of a trial court to deny Uber’s petition to compel arbitration in a case involving the worker misclassification of a former Uber Eats driver. According to the court, an agreement that the driver signed waiving the right to bring a claim under California’s Private Attorneys General Act (PAGA), is unenforceable, since such claims belong to the state, not to the individual. 

Erik Adolph filed suit against Uber in 2019, alleging that it misclassified its drivers as independent contractors rather than employees. As a result, Uber unlawfully failed to reimburse drivers for work expenses that they would be required to pay if they classified drivers as employees. Adolph later amended his complaint to include claims seeking civil penalties under PAGA. 

Uber filed a motion to compel arbitration based on an arbitration clause in the employment agreement that Adolph signed when he began working for the company. Uber also alleged that the court must determine the initial question of whether Adolph was an employee or an independent contractor via arbitration. As only aggrieved employees can bring PAGA claims, finding Adolph was an independent contractor would disqualify him from remedies under PAGA.

The court disagreed, citing the California Supreme Court case of Iskanian v. CLS Transportation. The court stated that the threshold determination of whether Adolph qualified as an aggrieved employee was not subject to arbitration under PAGA and that the arbitration agreement was unenforceable as to the right to bring a PAGA claim. 

Uber also argued that Iskanian and its related parties have undermined the purpose of the Federal Arbitration Act. Uber urged the court to reconsider state law precedent in light of the U.S. Supreme Court decision in Epic Systems Corp. v. Lewis, which upheld the enforceability of mandatory arbitration agreements as written under the FAA. The appellate court rejected Uber’s arguments, especially since the arbitration provision provided for some degree of court review in PAGA claims.

The case is Erik Adolph v. Uber Technologies, case number G059860, Court of Appeal of the State of California, Fourth Appellate District.

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