Written by Paul J. Dubow*
In 2023, the United States Supreme Court issued just one ADR-related decision, down from the record five decisions issued in 2022. In contrast, the California Supreme Court ended its two-year drought and published two decisions. The Ninth Circuit issued sixteen ADR-related decisions, four more than in 2022. One of the Ninth Circuit decisions involved mediation and was the sole appellate mediation decision in 2023. The Court of Appeal issued 47 decisions, one less than 2022. A discussion of the three decisions issued by the two high courts and some significant intermediate appellate court decisions follows.
In Adolph v. Uber Technologies, Inc.,1 the California Supreme Court largely resolved one of the last issues concerning the arbitration of disputes alleging a violation of the Private Attorneys General Act.2 That issue was whether a PAGA plaintiff whose individual claim was ordered to arbitration had standing to pursue a representative claim in court.
The standing issue became prominent after the United States Supreme Court decided Viking River Cruises, Inc. v. Moriana.3 In Viking River, the Court partially overruled the ruling rendered by the California Supreme Court in Iskanian v. CLS Transportation Los Angeles LLC,4 that both individual and representative PAGA claims were not arbitrable. The top court ruled that the Federal Arbitration Act5 preempted the bar against arbitration of individual claims but did not preempt the ban against arbitration of representative claims. Nevertheless, the court decided that the plaintiff in Viking River could not pursue her representative claim because PAGA "provides no mechanism to enable a court to adjudicate nonindividual PAGA claims once an individual claim has been committed to a separate proceeding."6 In doing so, the court cited Kim v. Reins International California, Inc.7
However, Kim did provide a "mechanism." Labor Code section 2699, subdivision (c) sets forth the requirements that one must meet to pursue a PAGA claim. In Kim, the California Supreme Court interpreted section 2699, subdivision (c) as having only two requirements for PAGA standing, to wit, the plaintiff must be
[Page 14]
an aggrieved employee, i.e., someone "'who was employed by the alleged violator" and "against whom one or more of the alleged violations was committed."8 In Kim, the employee plaintiff accepted a Code of Civil Procedure section 998 offer from his employer to settle the individual PAGA claim and the California Supreme Court permitted him to pursue the representative claim because the settlement was not an adjudication, and he remained an "aggrieved employee against whom one or more of the alleged violations was committed."
Because California courts are not bound to follow United States Supreme Court decisions that interpret purely state law, the California Supreme Court in Adolph refused to follow Viking River and held that employees whose individual claims were ordered to arbitration could file representative claims.9 The court stated that a worker becomes an "aggrieved employee" with standing to litigate claims on behalf of fellow employees upon sustaining a Labor Code violation committed by his or her employer. Standing under PAGA was not affected by enforcement of an agreement to adjudicate a plaintiff's individual claim in another forum. Arbitrating a PAGA plaintiff's individual claim did not nullify the fact of the violation or extinguish the plaintiff's status as an aggrieved employee The operative complaint here alleged that Adolph experienced Labor Code violations while driving for Uber. Adolph's allegations that Labor Code violations were committed against him while he was employed by Uber sufficed to confer standing to bring a PAGA representative action.
However, Adolph did not resolve disputes over the litigation of PAGA representative claims completely There is still an elephant in the room. The elephant is Code of Civil Procedure section 1281.4, which provides that where the court orders arbitration "of a controversy which is an issue involved in an action or proceeding pending before a court of this State," the court in which the action or proceeding is pending "shall, upon motion of a party, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies."10 In Seifu v. Lyft, Inc.,11 defendant employer asked the Court of Appeal to stay the representative claim pending resolution of the individual claim should it determine that the representative claim was not arbitrable. The court ruled that the representative claim was not arbitrable and remanded the case to the trial court to determine whether a stay was appropriate, given that the trial court had not had an opportunity to rule on that issue.
Parties can also contract which claim is adjudicated first without considering section 1281.4. In Gregg v. Uber Technologies, Inc.,12 the arbitration agreement provided "To the extent that there are any claims to be litigated in a civil court of competent jurisdiction because a civil court of competent jurisdiction determines that the PAGA Waiver is unenforceable with respect to those claims, the [p]arties agree that litigation of those claims shall be stayed pending the outcome of any individual claims in arbitration." Because of this provision, the Court of Appeal stayed prosecution of the representative claim pending completion of the arbitration of the individual claim.
The right to a stay cuts both ways. If the employee loses the arbitration, then the employee can no longer pursue the representative claim because there is an adjudication that the plaintiff is not an "aggrieved employee."13 But if the employee prevails, then the employer may be collaterally estopped from arguing that the class members are not aggrieved employees.
Abraham Bielski filed a class action against Coinbase, Inc. Coinbase's motion to compel arbitration was denied and it appealed, pursuant to section 16(a) of the FAA. Coinbase's motion to stay the litigation was denied by the district court and this ruling was affirmed by the Ninth Circuit.14
The Supreme Court granted Coinbase's petition for a writ of certiorari and reversed.15 It held that an appeal divests the district court of its control over those aspects of the case involved in the
[Page 15]
appeal.16 That principle reflected a longstanding tenet of American procedure and resolved the case.17 Whether the litigation could go forward in the district court was precisely what the court of appeals had to decide and it concluded that "it 'makes no sense for trial to go forward while the court of appeals cogitates on whether there should be one,'"18
Although it was unclear, prior to the issuance of this decision, whether a stay of litigation was available while an appeal from a denial of a motion to compel arbitration was pending in a federal appellate court, there was no question that such a stay was available in state court. Code of Civil Procedure section 1281.4 provided for a stay upon a motion by any party to the arbitration proceeding. Ironically, the difference remains. That is so because, during the 2023 legislative session, the Governor signed SB 365, which amended Code of Civil Procedure section 1294, subdivision (a) (the statute permitting an appeal from a denial of a motion to compel arbitration) by adding the phrase: "the perfecting of such appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal."19 Presumably, use of the word "automatically" gives a court some wiggle room to grant a stay upon the motion of a party, but it remains to be seen how often this will occur.
Code of Civil Procedure section 1288 provides that a motion to confirm an award must be filed within four years after service of the award on the petitioner. It also provides that a motion to vacate an award must be filed within 100 days of service of the award on the petitioner. This relatively straightforward approach is affected, however, by Code of Civil Procedure section 1290.6. That statute provides that a response to a petition must be served and filed within 10 days of service of the petition. That means that if the winning party in an arbitration files a motion to confirm 30 days after the award is served, and the losing party wishes to file a response that includes a motion to vacate, it must do so within 10 days thereafter, i.e., 40 days after the award is served, rather than 100 days, unless the parties to the court proceeding agree in writing to an extension, or the court, either explicitly or implicitly, finds "good cause" to extend the deadline and where such an extension would not unduly prejudice the other party20 Conversely, if the winning party waits 95 days to file the motion to confirm, then the losing party must file its response in five days because section 1288 still applies.21
The California Supreme Court attempted to resolve this confusion in Law Finance Group LLC v. Key.22 Law Finance Group23 prevailed in an arbitration with Key After the award was issued, LFG indicated that it planned to file a motion to confirm the award, while Key indicated that she planned to file a motion to vacate. LFG filed its motion within two weeks of the award. Subsequently, the parties agreed in writing to an extension of time within which Key could file a motion to vacate and response to the motion to confirm. Key filed the motion to vacate 130 days after the award was issued and a response to the motion to confirm 139 days after the award was issued. The response to the motion to confirm also asked that the award be vacated. The trial court held that the motion to vacate was untimely pursuant to section 1288, but nevertheless granted...
