In what some see as a strike against arbitration agreements, the California Supreme Court ruled an Uber Eats driver claiming he was misclassified as an independent contractor still has standing to sue under the state’s Private Attorneys General Act for multiple workers even when individual PAGA claims are sent by a court to arbitration.

“The ruling in Erik Adolph v. Uber Technologies, Inc., S274671, represents a major blow to California employers who had hoped to use employment-based arbitration agreements to keep PAGA litigation risks under control,” according to a post by law firm Atkinson, Andelson, Loya, Ruud and Romo.

California’s Private Attorneys General Act allows workers to sue an employer on behalf of the state for labor code violations.

In this case, plaintiff Erik Adolph worked as a driver for Uber Eats and had first filed a lawsuit in October 2019 claiming misclassification as an independent contractor. A trial court later granted a motion by Uber to compel individual arbitration and dismissed Adolph’s class action claims — Adolph had signed an agreement requiring individual arbitration. However, Adolph filed a second amended complaint which eliminated individual and class-action Labor Code claims with only his PAGA claims remaining.

The California Supreme Court ruled there was still standing for the nonindividual claims to proceed.

“In sum, where a plaintiff has filed a PAGA action comprised of individual and nonindividual claims, an order compelling arbitration of individual claims does not strip the plaintiff of standing to litigate nonindividual claims in court,” according to the opinion.

Uber is considering the options for appeal.

“The California Supreme Court’s decision contravenes the US Supreme Court’s holding in Viking River, violates the Federal Arbitration Act, and undermines the legislature’s intent in enacting PAGA.  We are considering our appellate options,” Theane Evangelis, counsel for Uber, said in a statement to SIA.