The Servicemaster Co. v. Cooley

California’s Private Attorneys General Act (PAGA) authorizes an “aggrieved” employee whose employer has violated the state’s Labor Code to sue the employer to enforce the Labor Code on behalf of the state. A PAGA plaintiff may bring both individual claims based on violations the employer has committed against the plaintiff and non-individual claims based on violations the employer has committed against other employees. Under a state-law contract rule that the U.S. Supreme Court upheld as consistent with the Federal Arbitration Act (FAA) in Viking River Cruises, Inc. v. Moriana (2022), an employee’s right to bring individual and non-individual PAGA claims cannot be prospectively waived. The FAA requires, however, that a court must enforce an employee’s agreement to submit individual PAGA claims to arbitration while retaining the ability to bring non-individual claims in court. Following Viking River, the California Supreme Court held in Adolph v. Uber Technologies (2023) that an employee whose individual PAGA claims have been submitted to arbitration retains standing under California state law to continue pursuing non-individual PAGA claims in court.

In 2020, Tyron Cooley filed a PAGA lawsuit against his employer, Terminix, alleging that Terminix had committed several Labor Code violations against him and his fellow employees. Pointing to an arbitration agreement it had supposedly entered into with Cooley, Terminix moved to compel arbitration of Cooley’s individual PAGA claim. At the same time, Terminix argued that once Cooley’s individual claim had been submitted to arbitration, his non-individual claims should be dismissed for lack of standing under California law. A federal district court granted Terminix’s motion, compelling Cooley’s individual claim to arbitration and dismissing his non-individual claims. While the case was on appeal to the Ninth Circuit, the California Supreme Court issued its decision in Adolph, thus establishing that the district court in this case had incorrectly applied state law. Terminix, though, argued that the Ninth Circuit should nonetheless affirm because, in its view, the FAA preempted the state-law rule announced in Adolph. The Ninth Circuit disagreed and, applying Adolph, held that Cooley’s non-individual claims should be stayed in court, not dismissed, pending arbitration of his individual claim.

Terminix petitioned the Supreme Court to review the Ninth Circuit’s ruling. Co-counseling with attorneys at Workman Law Firm, PC, Public Citizen represented Cooley in opposing Terminix’s petition. Among other things, the brief in opposition explains that no court has accepted Terminix’s FAA preemption argument and that the argument is inconsistent with Viking River. The Court denied the petition.