Ninth Circuit Court of Appeals Clarifies Question of Statutory Standing for Workers Bringing Representative Claims under PAGA, in Cooley v. ServiceMaster Company LLC

Ninth Circuit Court of Appeals Clarifies Question of Statutory Standing for Workers Bringing Representative Claims under PAGA, in Cooley v. ServiceMaster Company LLC

Last week, in Cooley v. ServiceMaster Company LLC, the Ninth Circuit Court of Appeals held that a former employee maintained statutory standing to bring representative wage claims under California’s Private Attorneys General Act (PAGA), even when his arbitration agreement compelled him to individual arbitration. PAGA is a law critical for holding employers accountable for wage violations, as it permits workers to sue employers for these Labor Code violations on behalf of the State. This decision is a win for workers’ rights, as it clarifies the question of statutory standing for bringing representative actions under PAGA, an issue left unclear in the wake of recent PAGA and arbitration-related decisions, such as Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906 and Adolph v. Uber (2023) 14 Cal.5th 1104. Bryan Schwartz Law has previously blogged about Viking River here, and about Adolph v. Uber here.

In Cooley, the plaintiff, Tyron Cooley, was a former employee for Terminix, a pest control company, and on May 8, 2020, he filed a complaint in state court against his former employer, alleging a variety of wage violations. Cooley brought the complaint on an individual, class-wide, and representative basis, the last of which was done under PAGA. Terminix had the case removed to federal court, then moved to compel arbitration and stay the proceedings in district court, because Cooley had signed an arbitration agreement. The court granted the motion.

After the Supreme Court’s decision in Viking River in 2022, Terminix then moved to dismiss the complaint for lack of statutory standing. Viking River held that PAGA claims were divisible into arbitrable individual claims and non-arbitrable representative claims. Terminix argued that such a holding suggested that when the plaintiff’s individual claims are arbitrated, as in Cooley’s case, they would be stripped of statutory standing to pursue representative PAGA claims. The district court accepted this argument and granted the motion to dismiss.

After Cooley’s appeal of the dismissal, the Ninth Circuit vacated the district court’s decision. The Ninth Circuit cited Adolph v. Uber’s holding that plaintiffs maintain statutory standing for PAGA claims because “an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.” 14 Cal.5th at 1114. Because the question of statutory standing under PAGA was an issue of state law and because the California Supreme Court decided this question in Adolph v. Uber, the Ninth Circuit followed the Adolph v. Uber holding. Accordingly, the Ninth Circuit held that Cooley had statutory standing to bring his representative PAGA claims, and vacated the district court’s order.

The decision in Cooley is an important victory for workers’ rights, because this holding prevents trial courts from striking down PAGA representative claims solely on the basis of statutory standing, whenever the named party is subject to an arbitration agreement. Foreclosing another avenue for employers to dismiss PAGA claims should strengthen PAGA and therefore strengthen Labor Code enforcement, encouraging employees to bring wage and other claims on behalf of their co-workers and the State to court.

If your employer is involved in systemic wage and hour violations, you can hold it accountable under Labor Code and under PAGA. If you believe that you have wage and hour violations at your company, please contact Bryan Schwartz Law, P.C.