Commentators have predicted that California appellate courts would thumb their nose at the U.S. Supreme Court’s 2022 holding in Viking River. Viking River was the case that abrogated the California rule of Iskanian, and held instead that employers could enforce waivers of representative PAGA claims.
And thumb its nose is just what the Second District did in Seifu v. Lyft, Inc. (D2d4 Mar. 30, 2023 B301774) ___ Cal.Rptr. 3d (2023 WL 2705285). There, the employee argued that Lyft intentionally misclassified drivers as independent contractors rather than employees, and argued that Lyft could not enforce their agreement to arbitrate representative PAGA claims.
The California trial court agreed with the employee. So did the Court of Appeal. After the California Supreme Court denied review, the U.S. Supreme Court granted certiorari and remanded for further consideration in light of Viking River Cruises, Inc. v. Moriana (2022) 596 U.S[.__142 S.Ct. 1906, 213 L.Ed.2d 179].)
The parties agreed that the individual claim had to be arbitrated. But what about the representative PAGA claim? The U.S. Supreme Court held that, once an individual claim is sent to arbitration, there was no longer any standing to maintain a separate representative action.
But the California Court of Appeal disagreed with the U.S. Supreme Court. To repeat: a California intermediate court declined to follow the U.S. Supreme Court. On what basis did the Second District do this? Here’s how:
“We conclude that we are not bound by the analysis of PAGA standing set forth in Viking River. As Justice Sotomayor recognized in her concurring opinion, PAGA standing is a matter of state law that must be decided by California courts. Until we have guidance from the California Supreme Court, our review of PAGA and relevant state decisional authority leads us to conclude that a plaintiff is not stripped of standing to pursue non-individual PAGA claims simply because his or her individual PAGA claim is compelled to arbitration.”
Note that the California Supreme Court did not grant review the first time around. Given this showdown in a published opinion, expect the Supremes to take it up now.
It takes some pluck for a state appellate court to disagree with the U.S. Supreme Court. One can disagree with the reasoning of Viking River. And as it concerns state substantive law, as the Second District notes, “we are not bound by the United States Supreme Court's interpretation of California law.”
But the issue here is one of standing. And standing is, at most, only arguably a question of substantive law. The practical problem is this: If California courts hold that employees have standing to bring representative PAGA claims (even while their individual claims are relegated to arbitration), while the U.S. Supreme Court holds there is no standing, then California courts deciding such claims would no longer be subject to the U.S. Supreme Court. In other words, the U.S. Supreme Court has Marburyed itself out of representative PAGA claims, while California courts, thus far, have not.
Are there other areas of law where state courts operate beyond the scope of U.S. Supreme Court review? Maybe there are. Regardless, putting claims outside the jurisdiction of the U.S. Supreme Court seems significant.
