Johnson v. Lowe’s Home Centers, LLC
The Ninth Circuit’s answer to what a federal court does with a PAGA case after Adolph: compel the individual claim to arbitration, vacate any dismissal of the non-individual claims that rested on Viking River’s reading of California law, and send them back — with a concurrence warning that the arbitration half of that structure may not stay this comfortable.
Johnson v. Lowe’s Home Centers, LLC (9th Cir. 2024) 93 F.4th 459
PAGA
Arbitration
Ninth Circuit
In brief. By the time Adolph v. Uber Technologies, Inc. was decided in July 2023, a great many PAGA cases had already been dismantled in federal court on the strength of Viking River’s reading of California law: individual claim to arbitration, non-individual claims dismissed for want of standing. Johnson is the Ninth Circuit telling district courts what to do about that. The panel affirmed the order compelling arbitration of the individual PAGA claim, and then vacated the dismissal of the non-individual claims — not because the district court erred, but because the law it applied has since been corrected at the source: “When the district court dismissed those claims, its dismissal was consistent with California law as then interpreted by the United States Supreme Court in Viking River. While this case was on appeal to us, the California Supreme Court in Adolph corrected that interpretation of California law.” (Johnson v. Lowe’s Home Centers, LLC (9th Cir. 2024) 93 F.4th 459, 462.) The panel also rejected the argument that Adolph cannot be squared with Viking River. Judge Lee concurred to say that the peace may not hold.
By Jonathan J. Delshad
Founder & Editor-in-Chief
Facts
The agreement. Maria Johnson signed a predispute employment contract providing that “any controversy between Johnson and Lowe’s . . . arising out of her employment or the termination of her employment shall be settled by binding arbitration.” It contained a “representative action waiver” barring any dispute from being “arbitrated as a representative action or as a private attorney general action, including but not limited to claims brought pursuant to the Private Attorney General Act of 2004, Cal. Lab. Code § 2698,” and it contained a severability clause. (Johnson v. Lowe’s Home Centers, LLC (9th Cir. 2024) 93 F.4th 459, 462, 464.)
The two halves of a PAGA case. The panel opened by naming the distinction the rest of the opinion turns on. An action under PAGA “contains both ‘individual’ and ‘non-individual’ claims.” An individual claim “is based on a violation of California labor law that affects a PAGA plaintiff employee personally”; a non-individual claim, “sometimes referred to as a ‘representative’ PAGA claim, is based on a violation of California labor law that affects other employees.” (Id. at p. 462.)
The sequence, which is the whole case. Johnson filed in California state court on November 23, 2020, pleading both individual and non-individual PAGA claims; Lowe’s removed. The Supreme Court decided Viking River Cruises, Inc. v. Moriana on June 15, 2022. Lowe’s then moved to compel arbitration of the individual claim and to dismiss the non-individual claims, and on September 21, 2022 the district court granted the motion “in its entirety.” Johnson appealed. On July 17, 2023 the California Supreme Court decided Adolph v. Uber Technologies, Inc. Before argument, the Ninth Circuit ordered supplemental briefing on Adolph’s impact. (Id. at p. 462.)
Procedural history
The appeal came up under 28 U.S.C. section 1291, and the order compelling arbitration was reviewed de novo. (Johnson, supra, 93 F.4th at pp. 462, 464.)
The doctrinal layer, as the panel set it out. PAGA lets an “aggrieved employee” sue for civil penalties “on behalf of himself or herself and other current or former employees” (Lab. Code, § 2699, subd. (a)), acting as a proxy of the State; a non-individual PAGA claim is a “type of qui tam action,” “fundamentally a law enforcement action” in which the State “is always the real party in interest in the suit.” (Johnson, supra, 93 F.4th at pp. 462–463, quoting Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1113.) Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 held a predispute waiver of the right to bring non-individual PAGA claims in court invalid and not preempted. Viking River read Iskanian to impose a mandatory joinder rule — both halves in one forum — and held that rule preempted, while leaving the anti-waiver holding intact: “That aspect of Iskanian is not preempted by the FAA.” (Id. at p. 463, quoting Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662.)
The concurrence that made Adolph possible. The panel quoted Justice Sotomayor’s Viking River concurrence at length, and it is worth keeping in view because it is the hinge: the majority’s standing conclusion rested “on available guidance from California courts,” and “if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.” (Id. at p. 463, quoting Viking River, supra, 596 U.S. at p. 664 (conc. opn. of Sotomayor, J.).) A year later, in Adolph, they had it: “Where a plaintiff has filed a PAGA action comprised of individual and non-individual claims, an order compelling arbitration of individual claims does not strip the plaintiff of standing to litigate non-individual claims in court.” (Id. at p. 463, quoting Adolph, supra, 14 Cal.5th at p. 1123.) Standing is lost only if there is a final determination that the arbitrated individual claim lacks merit. (Id. at pp. 463–464.)
Issue
The panel framed three questions: “First, did the district court properly compel Johnson to arbitrate her individual PAGA claim? Second, how does the California Supreme Court’s decision in Adolph affect Johnson’s non-individual PAGA claims? Third, is Adolph inconsistent with Viking River?” (Johnson, supra, 93 F.4th at p. 464.)
Holding
The individual claim goes to arbitration. A court asked to compel arbitration must “first determine whether a valid agreement to arbitrate exists, and if it does, whether the agreement encompasses the dispute at issue.” “Because both conditions here are met, we affirm the district court’s decision to compel Johnson to arbitrate her individual claim.” The representative action waiver did not take the rest of the contract down with it: “Pursuant to the severability clause, any unlawful aspects of the contract are severed. The rest of the contract—including Johnson’s agreement to arbitrate her individual PAGA claim—remains binding and enforceable.” (Johnson v. Lowe’s Home Centers, LLC (9th Cir. 2024) 93 F.4th 459, 464.) The dismissal of the non-individual claims is vacated. “While this case was on appeal to our court, the California Supreme Court in Adolph corrected Viking River’s misinterpretation of PAGA, holding that a PAGA plaintiff can arbitrate his individual PAGA claim but at the same time maintain his non-individual PAGA claims in court. We therefore vacate the district court’s order with respect to Johnson’s non-individual PAGA claims and remand those claims to the district court to apply Adolph.” (Ibid.) Adolph and Viking River can coexist. “Lowe’s contends that Adolph is inconsistent with Viking River. We disagree.” A state court may correct a federal court’s misreading of state law, though it “may not interpret state law in such a manner that it conflicts with supreme federal law” — and “[w]e hold that the California Supreme Court in Adolph did not so interpret state law.” (Id. at pp. 464–465.) “There is nothing in Adolph that is inconsistent with the federal law articulated in Viking River.” (Id. at p. 465.) Disposition: “We AFFIRM the district court’s grant of the motion to compel arbitration of Johnson’s individual PAGA claim. We VACATE and REMAND the district court’s dismissal of Johnson’s non-individual PAGA claims. AFFIRMED in part; VACATED and REMANDED in part. Each party shall bear its own costs on appeal.” (Ibid.) Concurrence. Lee, J., joined the result but wrote “to highlight a lurking tension between Adolph and the Federal Arbitration Act” — seeing no irreconcilable conflict on these facts, but warning that “we should be wary of a potential conflict in future cases.” (Ibid. (conc. opn. of Lee, J.).)
Reasoning
1. The individual claim was the easy half. There is no PAGA-specific analysis here at all. The panel applied the ordinary two-step inquiry — valid agreement, dispute within its scope — found both satisfied, and affirmed. (Johnson, supra, 93 F.4th at p. 464.) The only feature worth noting is the severability clause, which did the work Viking River contemplated: the representative action waiver was unenforceable to the extent it barred non-individual PAGA claims, that piece was severed, and the agreement to arbitrate the individual claim survived intact. (Ibid., citing Viking River, supra, 596 U.S. at p. 660.) Employers write these clauses precisely so that a bad waiver does not cost them the arbitration; here it worked.
2. The remand rationale is unusual, and the wording matters. The panel did not say the district court got it wrong. It said the dismissal “was consistent with California law as then interpreted by the United States Supreme Court in Viking River,” and that “[w]hile this case was on appeal to us, the California Supreme Court in Adolph corrected that interpretation of California law.” (Johnson, supra, 93 F.4th at p. 462.) The remedy follows from that framing: “We remand Johnson’s non-individual PAGA claims to allow the district court to apply California law as interpreted in Adolph.” (Ibid.) This is not error correction; it is a federal appellate court updating the state-law premise of a judgment while the case is still in the pipeline.
That distinction has a practical edge. A litigant arguing for the same treatment does not need to show that the district court made a mistake — an argument that invites harmless-error and waiver responses. The argument is that the state-law predicate has changed and that a federal court applying state law must apply it as the state’s highest court has now construed it.
3. Why Adolph does not collide with Viking River. The panel’s answer rests on a division of authority rather than a reconciliation of outcomes. “It is axiomatic that a state court has the authority to correct a misinterpretation of that state’s law by a federal court” — the panel cited West v. American Telephone & Telegraph Co. (1940) 311 U.S. 223, 236, and Justice Sotomayor’s concurrence — but “a state court may not interpret state law in such a manner that it conflicts with supreme federal law.” (Johnson, supra, 93 F.4th at pp. 464–465.) The question is therefore not whether Adolph disagrees with Viking River about California law. Of course it does; that is what a state supreme court is for. The question is whether the rule Adolph announced offends the FAA.
The panel worked through Adolph in three moves, each measured against the FAA. “As required by the FAA and Viking River, the California Supreme Court in Adolph compelled the plaintiff to arbitrate his individual PAGA claims.” “[A]s permitted by the FAA and Viking River, the Court held in Adolph that PAGA prevented the plaintiff from waiving his right to pursue his non-individual PAGA claims in court.” And “as may or may not have been required but was certainly consistent with the FAA and Viking River, the Court held that if the plaintiff lost on the merits of his individual PAGA claims in arbitration, he no longer had standing to pursue his non-individual PAGA claims in court.” (Id. at p. 465.) The hedge in that third clause — “may or may not have been required” — is the panel declining to decide more than it had to.
4. The concurrence: what happens to the arbitration itself. Judge Lee agreed with the disposition and then identified a problem the majority did not reach. Under Adolph’s bifurcation, an arbitrator’s determination whether the plaintiff is an “aggrieved employee” can be confirmed and reduced to judgment, and that judgment governs whether the non-individual claims proceed. Judge Lee read that structure for what it does to the arbitration: “the California Supreme Court held that the arbitration decision of a low-stakes individual PAGA claim could have preclusive effect—at least for the statutory standing issue of who is an ‘aggrieved employee’—on the high-stakes non-individual PAGA claim in federal court. If so, that could tilt the stakes of arbitration for defendants and undermine the benefits of arbitration for everyone.” (Johnson, supra, 93 F.4th at p. 466 (conc. opn. of Lee, J.).)
The mechanism is economic rather than doctrinal, and he spelled it out: individual arbitrations are often low-stakes, and “[s]ometimes, companies even send non-lawyers, such as paralegals, to arbitration proceedings because an individual claim of, say, $500 is not worth a lawyer’s hourly rate.” But if findings from that proceeding could bind in the non-individual action, “companies may have little choice but to bring in the legal cavalry and devote substantial resources at that individual arbitration” — which “would undermine an arbitration’s efficiency, which is the ‘point’ of enforcing arbitration agreements according to their terms.” (Ibid.) That is an FAA argument in the Concepcion register: not that state law forbids arbitration, but that it changes arbitration into something the parties did not bargain for.
5. Why he found no conflict here — and this is the part to read twice. Judge Lee gave two reasons, and both are contingent. First, “plaintiffs with non-individual PAGA claims must still satisfy Article III standing in federal court, so any issue preclusion about statutory standing from the arbitration will likely be irrelevant” — a federal plaintiff must show Article III standing regardless, “which presumably is a more rigid requirement than PAGA statutory standing.” (Johnson, supra, 93 F.4th at pp. 466–467 (conc. opn. of Lee, J.).) He immediately flagged the limit: if an arbitrator made a finding “that has a wider impact beyond PAGA statutory standing, a small-stakes individual arbitration arguably could have preclusive effect on a major issue in a federal case involving millions of dollars,” but the parties had identified no such scenario, “so only a hypothetical tension exists here between the FAA and the Adolph decision.” (Id. at p. 467.)
Second, issue preclusion has its own escape valve: it does not apply where “the party sought to be precluded . . . did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action,” and the Supreme Court has said preclusion “may be inapt if ‘the amount in controversy in the first action was so small in relation to the amount in controversy in the second that preclusion would be plainly unfair.’” (Id. at p. 467 (conc. opn. of Lee, J.), quoting People v. Bratton (2023) 95 Cal.App.5th 1100 and B&B Hardware, Inc. v. Hargis Industries, Inc. (2015) 575 U.S. 138, 159.) Applied here: “an individual PAGA arbitration poses a much smaller financial risk to defendants than non-individual PAGA actions. So an arbitration decision on an individual PAGA claim may not be given preclusive effect in a later non-individual PAGA lawsuit in court.” (Ibid.)
Read together, those two reasons are a defense playbook as much as a rationale. The concurrence closes: “Based on the facts of our case, I do not see any clear conflict between Adolph and the FAA. But we should carefully examine the facts of future cases to see if this lurking tension morphs into an irreconcilable conflict.” (Id. at pp. 467–468.)
Significance
The remand posture is the holding that gets used. Between June 2022 and July 2023, non-individual PAGA claims were dismissed in federal courts across California on the reading of state law Viking River supplied. Johnson supplies the template for undoing those dismissals while the case is still live: the district court’s order is vacated, not reversed, and the claims go back “to allow the district court to apply California law as interpreted in Adolph.” (Johnson, supra, 93 F.4th at p. 462.) The framing — the district court was right on the law as it then stood, and the law has since been corrected at its source — is the sentence to borrow.
What it does not do. It does not disturb the order compelling arbitration of the individual claim, and it does not question a severability clause that saves an arbitration agreement after the representative action waiver is severed. (Id. at p. 464.) A plaintiff’s individual PAGA claim is going to arbitration. The fight is over what happens to the rest.
And it does not resolve the standing question on remand. The panel sent the non-individual claims back “to apply Adolph,” and said nothing about how a district court should manage them in the meantime — stay, hold in abeyance, or proceed — or about how Article III standing interacts with PAGA standing once the individual claim is in a different forum. Judge Lee’s first reason assumes the Article III inquiry is the more demanding one; that assumption has not been tested here.
The concurrence is the part with a future. Judge Lee did not say the FAA is violated. He said the tension is “lurking,” identified the fact pattern that would surface it — an arbitrator making findings with consequences beyond the “aggrieved employee” question, in a proceeding the employer had no incentive to litigate fully — and then gave the doctrinal answer that defuses it on these facts, which is the full-and-fair-opportunity exception to issue preclusion. (Id. at pp. 466–467 (conc. opn. of Lee, J.).) Both sides should read it as instructions.
For the plaintiff’s bar, the warning is concrete: the preclusive value of a favorable individual arbitration award is not something to count on. An arbitrator’s finding that the client is an aggrieved employee is confirmable and, under Adolph, preserves standing — but a defendant reading this concurrence will argue that a $500 proceeding gave it no fair opportunity to litigate the issue that now controls a case worth orders of magnitude more. For the defense bar, the concurrence is an invitation to build that record, and an argument to be careful about accepting: an employer that deliberately under-litigates an arbitration in order to defeat preclusion later is making a candid admission about what it was doing.
A currency note. The opinion was filed February 12, 2024; rehearing and rehearing en banc were denied April 3, 2024. It is published and precedential in the Ninth Circuit. The state-law premise it applies is Adolph, and the PAGA statute itself was substantially amended in 2024 — confirm both the current statutory text and subsequent history with a citator before relying on this decision.
Key quotes
“When the district court dismissed those claims, its dismissal was consistent with California law as then interpreted by the United States Supreme Court in Viking River. While this case was on appeal to us, the California Supreme Court in Adolph corrected that interpretation of California law.” (Johnson v. Lowe’s Home Centers, LLC (9th Cir. 2024) 93 F.4th 459, 462.)
“We remand Johnson’s non-individual PAGA claims to allow the district court to apply California law as interpreted in Adolph.” (Ibid.)
“It is axiomatic that a state court has the authority to correct a misinterpretation of that state’s law by a federal court. [Citations.] However, a state court may not interpret state law in such a manner that it conflicts with supreme federal law. We hold that the California Supreme Court in Adolph did not so interpret state law.” (Id. at pp. 464–465.)
“There is nothing in Adolph that is inconsistent with the federal law articulated in Viking River.” (Id. at p. 465.)
“But I write separately to highlight a lurking tension between Adolph and the Federal Arbitration Act (FAA). While I do not believe that an irreconcilable conflict between California law and the FAA exists in our case, we should be wary of a potential conflict in future cases.” (Ibid. (conc. opn. of Lee, J.).)
“So an arbitration decision on an individual PAGA claim may not be given preclusive effect in a later non-individual PAGA lawsuit in court.” (Id. at p. 467 (conc. opn. of Lee, J.).)
Practice pointer
If your non-individual PAGA claims were dismissed on Viking River grounds, frame the argument as a change in the state-law premise, not as district court error. That is the move Johnson models: the dismissal “was consistent with California law as then interpreted” and Adolph “corrected that interpretation” (93 F.4th at p. 462). On a live appeal, ask for a vacatur and remand to apply Adolph. Where the case is already final, that path is closed — which is why the posture of your file matters more than the merits of the argument. Ask the court of appeals for supplemental briefing when the state’s highest court moves. The Ninth Circuit ordered it here on its own before argument (id. at p. 462). Do not assume the panel has tracked a state decision that issued after the briefs were filed; file a Rule 28(j) letter and ask. Read the severability clause before you attack the waiver. A representative action waiver that is unenforceable as to non-individual claims will usually be severed, leaving the agreement to arbitrate the individual claim intact (id. at p. 464). Attacking the waiver alone buys the client an arbitration, not a day in court. Plead and preserve Article III standing separately. Judge Lee’s first reason for finding no FAA conflict is that a federal PAGA plaintiff must satisfy Article III independently of PAGA standing (id. at pp. 466–467, conc. opn. of Lee, J.). In federal court, plead the plaintiff’s own concrete injury from the Labor Code violations, not merely aggrieved-employee status — and if the case belongs in state court, think hard before letting it be removed. Do not build a settlement or trial plan on the preclusive effect of the individual arbitration. Adolph makes a confirmed finding of aggrieved-employee status binding, but the concurrence sets out exactly how a defendant will argue around it: a low-stakes proceeding in which it had no adequate incentive to litigate fully (id. at p. 467). If the preclusive effect matters to the case, make the individual arbitration a real proceeding — full discovery on the aggrieved-employee facts, a reasoned award, a record that forecloses any claim that the employer never had a fair chance to litigate — and move promptly to confirm. Ask the district court what it intends to do with the non-individual claims on remand. Johnson says apply Adolph; it does not say stay, abate or proceed. Raise case management early, in writing, so the choice is a ruling you can point to rather than a default. Check the statute, not just the case law. PAGA was substantially amended in 2024; whether a given case is governed by the pre- or post-amendment regime turns on filing and notice dates, and that question is upstream of everything discussed here.
Open questions
What a district court does with the non-individual claims while the individual claim is arbitrated. The panel remanded “to apply Adolph” and said no more. (Johnson, supra, 93 F.4th at p. 464.) Whether the claims are stayed pending the arbitration, held in abeyance, or allowed to proceed is left to the district court, and the choice has real consequences for cost and for the preclusion questions the concurrence raises.
Whether Article III standing really is the more demanding requirement. Judge Lee’s first reason assumes that a plaintiff who satisfies Article III will necessarily satisfy PAGA standing, calling the federal requirement one that “presumably is a more rigid requirement than PAGA statutory standing.” (Id. at p. 467 (conc. opn. of Lee, J.).) “Presumably” is doing work there, and the relationship between the two inquiries after a bifurcation is not settled.
The preclusive reach of an individual PAGA arbitration. The concurrence identifies the unresolved case: an arbitrator making a finding “that has a wider impact beyond PAGA statutory standing” in a proceeding the employer had little incentive to litigate. (Ibid.) Whether the full-and-fair-opportunity exception defeats preclusion in that setting — and who bears the burden on it — is undecided.
Whether the “lurking tension” becomes a holding. The panel held only that Adolph does not conflict with the FAA on these facts, and expressly reserved whether Adolph’s merits-based standing rule “may or may not have been required” by federal law. (Id. at p. 465.) A future case presenting the preclusion scenario squarely would put that reservation in play.
How the 2024 PAGA amendments interact with this structure. The opinion applies the statute as it stood for a 2020 filing. Nothing in it addresses the amended penalty, cure and manageability provisions, or whether they change the calculus of bifurcation.
See also: LaCour v. Marshalls of California (2025) · Brown v. Dave & Buster’s of California