Rideshare companies ask justices to reexamine California worker-protection law

Petitions of the week

The Petitions of the Week column highlights a selection of cert petitions recently filed in the Supreme Court. A list of all petitions we’re watching is available here.

The Supreme Court’s 2022 decision in Viking River Cruises v. Moriana was a victory for employers seeking to enforce mandatory arbitration clauses in the face of a landmark California worker-protection law. The court found that the California law was inconsistent with the federal arbitration law’s broad mandate that courts enforce arbitration agreements. This week, we highlight petitions that ask the court to consider, among other things, whether California courts are correct that the law, despite the decision in Viking River, nonetheless allows workers to keep disputes in court.

Twenty years ago, California enacted the Private Attorneys General Act, which allows workers to file lawsuits – on their own behalf and on behalf of other employees – against their employers for any violations of the California labor code. These lawsuits are known as representative actions because the employee is suing in place of the state, which receives the bulk of any money awarded as a result of the lawsuit; the remaining funds are distributed among affected workers.

Johnathon Gregg signed up to drive with Uber in California in 2016. When setting up his account, he did not opt out of Uber’s arbitration agreement, which asks drivers to waive their right to bring lawsuits under the PAGA, specifically, and agree more broadly to address disputes with Uber in arbitration, rather than in court, on an individual basis.

Two years later, Gregg filed a lawsuit in California state court. He argued that, under the PAGA, Uber had violated state law by classifying him and other drivers as independent contractors rather than employees.

Uber sought to enforce the arbitration agreement. The state courts ruled in favor of Gregg, following a decision by the California Supreme Court that voided mandatory arbitration agreements requiring workers to waive their rights under the PAGA.

Uber asked the justices to review the state court’s ruling. While its petition was pending, the court issued its decision in Viking River, holding that the PAGA is inconsistent with the Federal Arbitration Act’s sweeping requirement for courts to enforce arbitration agreements. An eight-justice majority ruled that, when an employment contract contains an arbitration clause, that clause must be enforced against an employee’s right to bring a claim on behalf of themselves under the PAGA.

Five justices went further, concluding that once a worker’s individual claim goes to arbitration, the representative claims should be dismissed because they no longer have a right to sue – known as standing – for injuries against other workers on behalf of the state under the PAGA. In joining that second holding, however, Justice Sonia Sotomayor wrote separately to emphasize that “if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.”

After Viking River, the justices sent Gregg’s case back to the California courts. A state appeals court granted Uber’s request to have the question whether Gregg should be classified as an employee or an independent contractor under California law decided by an arbitrator. But it rejected Uber’s request to go further and toss the representative claims as well.

The California appeals court held that the five-justice majority in Viking River got the state-law question wrong. Once Gregg was compelled to arbitrate his own claim, the state court concluded, he did not lose the ability to bring representative claims under the PAGA. Instead, the court reasoned, those claims should be put on hold until an arbitrator decides whether Uber wrongly classified Gregg as an independent contractor; if so, Gregg could then resume his effort to seek the same relief for other Uber drivers in court. And that arrangement is consistent with the FAA, the state appeals court reasoned, because it still permits the separation of Gregg’s individual, arbitrable claim into a “separate and distinct action[].”

In Uber Technologies, Inc. v. Gregg, the rideshare company asks the justices to reverse the state court’s ruling. Uber argues that the core of Viking River was a recognition that the FAA respects agreements to arbitrate in separate, individual proceedings, and that California courts may not evade that federal mandate by reinterpreting the PAGA. “This Court should grant review,” the company writes, “and put a stop to the California courts’ end-run of the FAA and Viking River.”

In Lyft, Inc. v. Seifu, rival rideshare company Lyft, which also considers its drivers to be contractors and asks them to agree to a similar arbitration clause when enrolling, asks the justices to grant review of and reverse a decision by another California appeals court holding that a driver could maintain a representative action under the PAGA while an arbitrator decides their individual claim to be reclassified as an employee.

A list of this week’s featured petitions is below:

John and Jane Parents 1 v. Montgomery County Board of Education
23-601
Issues: (1) Whether, when a public school, by policy, expressly targets parents to deceive them about how the school will treat their minor children, parents have standing to seek injunctive and declaratory relief in anticipation of the school applying its policy against them; and (2) whether, assuming the parents have standing, a school policy that requires school employees to hide from parents that their child is transitioning gender at school if, in the child’s or the school’s estimation, the parents will not be “supportive” enough of the transition, violates their fundamental parental rights.

Uber Technologies, Inc. v. Gregg
23-645
Issue: Whether the Federal Arbitration Act requires the complete severance of arbitrable individual claims under the California Private Attorneys General Act from non-individual claims, with the individual claims committed to a separate proceeding.

Hi-Tech Pharmaceuticals, Inc. v. Federal Trade Commission
23-704
Issues: (1) Whether a fundamental change in decisional law can independently support relief from a judgment under Federal Rule of Civil Procedure 60(b)(6); and (2) whether the Federal Trade Commission can obtain compensatory equitable remedies as sanctions for civil contempt of a permanent injunction under Section 13(b) of the Federal Trade Commission Act when those remedies are not directly available under Section 13(b).

Rose v. PSA Airlines, Inc.
23-734
Issue: Whether non-tracing monetary remedies, such as surcharge, are available under 29 U.S.C. § 1132(a)(3) to plan participants and beneficiaries asserting breach of fiduciary duty claims against plan fiduciaries under the Employee Retirement Income Security Act of 1974.

Israelitt v. Enterprise Services LLC
23-776
Issue: Whether the Americans with Disabilities Act provides for damages (and therefore a trial by jury) in cases alleging that an employer has violated the act’s anti-retaliation provision.