Yuriria Diaz v. Macy's West Stores

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

YURIRIA DIAZ, as an individual and

on behalf of all others similarly

situated,

Plaintiff-Appellee,

MACYS WEST STORES, INC., DBA

Macy's, AKA Macy's Retail Holdings,

LLC, an Ohio corporation,

Defendant-Appellant.

No. 22-56209

D.C. No.

8:19-cv-00303-

PSG-MAA

OPINION

Appeal from the United States District Court

for the Central District of California

Philip S. Gutierrez, Chief District Judge, Presiding

Argued and Submitted November 17, 2023

Pasadena, California

Filed May 10, 2024

2 DIAZ V. MACYS WEST STORES, INC.

Before: Jay S. Bybee, D. Michael Fisher,

and Kenneth K.

Lee, Circuit Judges.

Opinion by Judge Bybee

SUMMARY

Arbitration

The panel affirmed the district court’s order compelling

arbitration of Yuriria Diaz’s individual California Private

Attorneys General Act (“PAGA”) claims, vacated the order

to the extent it compels arbitration of her non-individual

claims, and remanded to the district court to dispose of the

nonarbitrable claims consistent with the California Supreme

Court’s decision in Adolph v. Uber Technologies, Inc., 532

P.3d 682 (Cal. 2023), and the agreement of the parties.

Diaz sued her former employer, Macy’s West Stores,

Inc., under PAGA for violations of California’s labor

code. Macy’s appealed the district court’s order compelling

arbitration of all Diaz’s claims.

The panel concluded that it had jurisdiction to review the

district court’s order as a final decision with respect to

arbitration. The district court compelled arbitration without

explicitly dismissing the underlying claims. The district

The Honorable D. Michael Fisher, United States Circuit Judge for the

U.S. Court of Appeals for the Third Circuit, sitting by designation.

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

DIAZ V. MACYS WEST STORES, INC. 3

court’s denial of Diaz’s requested stay, combined with the

language of closure, overcame any presumption that the

action was stayed pending the arbitration. The panel

concluded that the district court intended its administrative

closure of the case to be a final decision.

The panel looked to the parties’ agreement to determine

whether the parties consented to arbitration of Diaz’s PAGA

claims. The panel held that at the time of contracting, the

parties consented only to arbitration of individual claims

relating to Diaz’s own employment. The agreement’s

language was strongly indicative of an intent to exclude any

amalgamation of employees’ claims—including non-

individual PAGA claims—from arbitration.

The panel rejected Macy’s request that the district court

on remand be instructed to dismiss the non-individual claims

because under Adolph, those claims cannot be

dismissed. The panel remanded with instruction to treat the

nonarbitrable non-individual claims consistent with Adolph,

anticipating that the parties will, per their agreement, request

a stay with respect to those claims.

4 DIAZ V. MACYS WEST STORES, INC.

COUNSEL

Ryan H. Wu (argued), Melissa Grant, and Robert J. Drexler,

Jr., Capstone Law APC, Los Angeles, California; Armond

M. Jackson and Andrea Fernandez-Jackson, Jackson Law

APC, Irvine, California; for Plaintiff-Appellee.

Felix Shafir (argued) and Peder K. Batalden, Horvitz & Levy

LLP, Burbank, California; Fermin H. Llaguno and Pejmon

D. Bodaghi, Littler Mendelson PC, Irvine, California;

Catherine E. Sison and Michael Christman, Macy’s Inc. Law

Department, St. Louis, Missouri; for Defendant-Appellant.

Andrew B. Davis, Lehotsky Keller LLP, Austin, Texas;

Drew F. Waldbeser, Lehotsky Keller LLP, Atlanta, Georgia;

Steven P. Lehotsky, Chief Counsel for Regulatory

Litigation, Lehotsky Keller LLP, Washington, D.C.; for

Amici Curiae National Retail Federation and Retail

Litigation Center Inc.

OPINION

BYBEE, Circuit Judge:

Plaintiff-Appellee Yuriria Diaz sued her former

employer, Defendant-Appellant Macy’s West Stores, Inc.

(“Macy’s”) under California’s Private Attorneys General

Act (“PAGA”) for violations of California’s labor code.

Macy’s appeals the district court’s order compelling

arbitration of all Diaz’s claims. It requests that we vacate

that order in part, ordering arbitration of only the individual

PAGA claims—those that relate to Diaz’s own

employment—while ordering the non-individual claims—

DIAZ V. MACYS WEST STORES, INC. 5

claims involving code violations against other Macy’s

employees—dismissed. We agree with Macy’s that under

the parties’ arbitration agreement, only Diaz’s individual

PAGA claims should be arbitrated. But the California

Supreme Court’s recent decision in Adolph v. Uber

Technologies, Inc., 532 P.3d 682 (Cal. 2023), forecloses

Macy’s request that the non-individual claims be dismissed.

We therefore affirm the district court’s order in part and

vacate in part. Diaz’s individual PAGA claims were

properly ordered to arbitration, but we vacate that portion of

the order compelling arbitration of the non-individual

claims. We remand to the district court to treat the

nonarbitrable claims consistent with Adolph and the

agreement of the parties.

I. FACTUAL AND PROCEDURAL BACKGROUND

PAGA was enacted to provide for broader enforcement

of California’s labor code against employers. Kim v. Reins

Int’l Cal., Inc., 459 P.3d 1123, 1127 (Cal. 2020). It

authorizes “aggrieved employees” to seek civil penalties for

code violations as agents of the California Labor and

Workforce Development Agency (LWDA) or its

departments. Cal. Lab. Code § 2699(a). The aggrieved

employee must notify his employer and the LWDA of the

potential violations. The LWDA may investigate and, as

appropriate, bring its own action. If the LWDA fails to

proceed, the employee may pursue the PAGA claims as the

State’s representative. Id. § 2699.3(a)(2). The employee

may bring a PAGA claim “on behalf of himself or herself and

other current or former employees.” Id. § 2699(a). We have

referred to these different types of claims under PAGA as

6 DIAZ V. MACYS WEST STORES, INC.

“individual” and “non-individual” claims.

See, e.g.,

Johnson v. Lowe’s Home Centers, LLC, 93 F.4th 459, 462

(9th Cir. 2024).

Yuriria Diaz began working for Macy’s as a store clerk

in October 2012. During the hiring process, the two parties

entered into an agreement by which Diaz consented to a

four-step process for resolving employment-related disputes.

The final step was arbitration, which “replaces any right [the

employee] might have to go to court.” Nevertheless, the

arbitration agreement included a waiver that precluded

arbitration of “consolidate[d] claims of different Associates”

and “class or collective action[s].” In June 2020, Macy’s

reduced its workforce and terminated Diaz’s employment.

Prior to her termination, in January 2019, Diaz sued

Macy’s in California Superior Court, alleging various

violations of the California Labor Code. Shortly thereafter,

Macy’s removed the case to federal district court. Diaz then

amended her complaint, limiting her claims to violations of

PAGA—both individual claims with respect to Macy’s

There has been some confusion in describing these different claim

types. Courts sometimes refer to them as “individual” and

“representative” claims respectively. But in one sense all PAGA claims

are representative: similar to qui tam actions, the aggrieved employee

brings the suit as the representative of the State, even if the suit is limited

to alleged violations affecting only the employee. See Viking River

Cruises, Inc. v. Moriana, 142 S. Ct. 1906, 1916 (2022); Kim, 459 P.3d at

1127. To avoid this confusion and to adhere to our own past practice, we

will use the term “individual PAGA claim” to mean a claim in which the

aggrieved employee is prosecuting code violations only as they affect

her personally. We use the term “non-individual PAGA claim” to

describe claims where the aggrieved employee is prosecuting code

violations affecting other employees.

DIAZ V. MACYS WEST STORES, INC. 7

conduct toward her and non-individual claims having to do

with Macy’s conduct toward other employees.

The parties agreed to stay the proceedings pending the

Supreme Court’s decision in Viking River Cruises, Inc. v.

Moriana, 142 S. Ct. 1906 (2022), a case that similarly

involved both individual and non-individual California

PAGA claims. Following the Court’s decision, Macy’s

moved for the district court to order Diaz’s individual claims

to arbitration and to dismiss the non-individual claims, as the

Supreme Court had done. Diaz opposed the motion, arguing

that none of her PAGA claims were subject to the arbitration

agreement. She requested that the district court stay

adjudication of the PAGA claims pending the California

Supreme Court’s decision in Adolph v. Uber Technologies,

Inc., a case that would consider whether dismissal of non-

individual claims is required when individual PAGA claims

are ordered to arbitration. In other words, Adolph would

decide whether the Supreme Court’s approach in Viking

River was, as a matter of California law, correct under

PAGA.

The district court granted Macy’s motion in part by

ordering arbitration of Diaz’s individual PAGA claims. But

it also ordered the parties to arbitrate her non-individual

PAGA claims. It reasoned that the arbitration agreement’s

broad language must be interpreted to include non-

individual claims, and nothing in the class action waiver or

anywhere else in the agreement indicated that the parties

meant to exclude such claims from the scope of the

agreement. The court then denied Diaz’s motion to stay “as

moot” and “close[d]” the case “as there [were] no remaining

claims before the Court.” Macy’s brought this appeal.

8 DIAZ V. MACYS WEST STORES, INC.

II. STANDARD OF REVIEW

We review a district court’s decision to grant or deny a

motion to compel arbitration de novo. Bushley v. Credit

Suisse First Bos., 360 F.3d 1149, 1152 (9th Cir. 2004). “The

interpretation and meaning of contract provisions are

questions of law” and are also reviewed de novo. Ticknor v.

Choice Hotels Int’l, Inc., 265 F.3d 931, 936 (9th Cir. 2001).

III. APPELLATE JURISDICTION

At the outset, we must determine whether we have

jurisdiction to consider this appeal. The Federal Arbitration

Act (“FAA”), 9 U.S.C. § 1 et seq., authorizes appellate

review of orders relating to arbitration in limited

circumstances. See id. § 16. Since the enactment of § 16,

we have treated its parameters on appellate review as

jurisdictional.

See, e.g., Pac. Reinsurance Mgmt. Corp. v.

Ohio Reinsurance Corp., 935 F.2d 1019, 1022 (9th Cir.

1991). Diaz contends that none of the enumerated

circumstances permitting our review are present here and so

We have stated that the FAA “does not confer independent jurisdiction

on the federal courts.” Pac. Reinsurance Mgmt. Corp. v. Ohio

Reinsurance Corp., 935 F.2d 1019, 1021 (9th Cir. 1991). But because it

references and informs the scope of the underlying grants of appellate

jurisdiction at 28 U.S.C. §§ 1291 and 1292, we have given the terms of

§ 16 jurisdictional effect. See id. at 1021–22 (finding jurisdiction under

§ 1292 but holding that § 16’s prohibition of review over certain

interlocutory appeals limited that jurisdiction). We have read § 16(a) to

define certain categories of decisions with respect to arbitration that

qualify as final orders under 28 U.S.C. § 1291, thus confirming our

jurisdiction. See Hill v. Xerox Bus. Servs., LLC, 59 F.4th 457, 468 (9th

Cir. 2023). Although we have occasionally used a convenient shorthand

by saying that we have jurisdiction under § 16, we speak more precisely

when we say that we have jurisdiction under § 1291, as specified in § 16.

See, e.g., Bielski v. Coinbase, Inc., 87 F.4th 1003, 1008 (9th Cir. 2023).

DIAZ V. MACYS WEST STORES, INC. 9

we lack jurisdiction. On the other hand, Macy’s assures us

of our jurisdiction by arguing that the district court’s order

was “a final decision with respect to an arbitration,” id.

§ 16(a)(3), or, alternatively, an order “denying a

petition . . . to order arbitration,” id. § 16(a)(1)(B). We

conclude that we have jurisdiction to review the order as a

final decision with respect to arbitration.

“[F]inality is to be given a practical rather than a

technical construction.” Eisen v. Carlisle & Jacquelin, 417

U.S. 156, 171 (1974) (internal quotation marks and citation

omitted). A judicial decision on an arbitration dispute is

“final” for purposes of 9 U.S.C. § 16(a)(3) when it “ends the

litigation on the merits and leaves nothing more for the court

to do but execute the judgment.” Green Tree Fin. Corp.-Ala.

v. Randolph, 531 U.S. 79, 86 (2000) (internal quotation

marks and citations omitted). “[A]n order compelling

arbitration may be appealed if the district court dismisses all

the underlying claims, but may not be appealed if the court

stays the action pending arbitration.” MediVas, LLC v.

Marubeni Corp., 741 F.3d 4, 7 (9th Cir. 2014). Sometimes

the district court’s order is not explicit with respect to

dismissal or retention of the claims. Where the district court

compels arbitration without explicitly dismissing the

underlying claims, we have a “rebuttable presumption” that

the order stays the action and is thus not appealable. Id. at

9. Even “[a]n order administratively closing a case is a

docket management tool that has no jurisdictional effect.”

Dees v. Billy, 394 F.3d 1290, 1294 (9th Cir. 2005). That is,

administrative closure does not automatically render a

decision final (or non-final). See id. Finality is determined

instead by the context in which the order was issued.

MediVas, 741 F.3d at 9.

10 DIAZ V. MACYS WEST STORES, INC.

Here, the district court compelled arbitration without

explicitly dismissing the underlying claims. The court

compelled arbitration “in accordance with the [parties’]

arbitration agreement.” The Macy’s-Diaz agreement

specified that “If a party files a lawsuit in court to resolve

claims subject to arbitration, both agree that the court shall

dismiss the lawsuit and require the claim to be resolved

through [arbitration].” The agreement further provided that

in the event the suit involved arbitrable and nonarbitrable

claims, the parties would ask the court to stay the

nonarbitrable claims pending resolution of the arbitrable

claims. See 9 U.S.C. § 3. The district court concluded that

all of Diaz’s claims were arbitrable and denied Diaz’s

request for a stay because it was moot. The district court

“close[d]” the case “as there [were] no remaining claims

before the Court.” Although the district court did not

expressly state whether the underlying claims were

dismissed or stayed, Macy’s argues that the denial of Diaz’s

requested stay, combined with the language of closure,

overcomes any presumption that the action is stayed pending

the arbitration. We agree.

In MediVas, we presumed that litigation was stayed

pending the arbitration because the same motion which had

requested the compulsion had also requested a stay.

MediVas, 741 F.3d at 8. We reasoned that by granting the

motion as to the arbitration, and remaining silent on the

motion to stay, the district court likely intended to grant the

motion as to the stay. Id. Here, by contrast, Macy’s

requested that the district court compel arbitration of Diaz’s

individual claims and dismiss her non-individual claims,

while Diaz argued that no PAGA claims should be

immediately litigated and asked the court to stay the

litigation pending a decision in Adolph. The district read the

DIAZ V. MACYS WEST STORES, INC. 11

arbitration agreement as covering all of Diaz’s PAGA claims,

thus rendering her request for a stay—as an alternative to the

dismissal of the non-individual claims requested by

Macy’s—unnecessary. The court’s forthright rejection of the

need for the case to come back before it is sufficient to rebut

the presumption that the litigation was stayed. Considering

this context together with the court’s statement that “there

are no remaining claims before the Court,” “the most

reasonable inference” is that the district court intended its

administrative closure of the case to be a final decision.

Id.

We therefore have jurisdiction pursuant to 9 U.S.C.

§ 16(a)(3) and 28 U.S.C. § 1291 to hear this appeal.

IV. ARBITRABILITY OF THE NON-INDIVIDUAL

CLAIMS

The Federal Arbitration Act recognizes the utility of

arbitration—both to the parties and to the economy of the

judicial system. In the FAA, Congress “simply require[d]

courts to enforce previously negotiated agreements to

arbitrate, like other contracts, in accordance with their

terms.” Volt Info. Scis., Inc. v. Bd. of Trustees of Leland

Stanford Junior Univ., 489 U.S. 468, 478 (1989); see 9

U.S.C. § 4 (providing that courts may issue an order that

“arbitration proceed in the manner provided for in [the

parties’] agreement”). Not all claims, however, are subject

to arbitration. “The [FAA], after all, does not mandate the

Diaz counters that the case could find its way back to the district court

for several reasons, including to confirm, vacate, or modify the

arbitration award. See 9 U.S.C. §§ 9–11. Thus, she insists, there is

potentially more to do than simply execute the judgment, and so the

decision cannot be considered final. But the possibility that the parties

may file a new proceeding at the conclusion of the arbitration process

“does not vitiate the finality” of orders that dispose of the previous case

on the merits. See Green Tree, 531 U.S. at 86.

12 DIAZ V. MACYS WEST STORES, INC.

arbitration of all claims, but merely the enforcement—upon

the motion of one of the parties—of privately negotiated

arbitration agreements.” Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213, 219 (1985). The framework for judicial

enforcement of arbitration agreements is the terms of the

agreement itself, for it defines the scope of the parties’

consent to arbitrate their disputes. See Viking River, 142 S.

Ct. at 1918 (explaining how the “right to enforce arbitration

agreements” is necessarily tethered to fulfillment of the

agreement on its terms as a matter of consent); see also

Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287,

299 (2010) (“Arbitration is strictly ‘a matter of

consent . . . .’” (quoting Volt Info. Scis., Inc., 489 U.S. at

479)).

We must determine from the agreement between Macy’s

and Diaz whether the parties consented to arbitration of

Diaz’s PAGA claims. In construing the scope of an

arbitration agreement, we will “apply ordinary state-law

principles that govern the formation of contracts.” First

Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944

(1995); Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1210

(9th Cir. 1998). California contract law requires that the

words of a contract be given “their ordinary and popular

sense, rather than according to their strict legal meaning.”

Cal. Civ. Code § 1644. Contracts are to be interpreted

holistically, id. § 1641, so as “to give effect to the mutual

intention of the parties as it existed at the time of

contracting,” id. § 1636.

Article 2 of the Macy’s-Diaz agreement provides that

“all employment-related legal disputes” are subject to

arbitration. The one relevant limitation on that capacious

language is a waiver in Article 11(f)(ii) which provides that

“[t]he Arbitrator shall not consolidate claims of different

DIAZ V. MACYS WEST STORES, INC. 13

Associates into one proceeding. Nor shall the Arbitrator

have the power to hear an arbitration as a class or collective

action.” The district court read these provisions to apply

broadly to all of Diaz’s PAGA claims. It found her individual

claims fell easily within the contract and that, although class

or collective actions were excluded from arbitration, the

agreement did not except non-individual PAGA claims from

arbitration. In interpreting Article 11’s waiver provision, the

district court looked to the Supreme Court’s 2022 decision

in Viking River, where the Court distinguished between class

actions and non-individual PAGA claims. 142 S. Ct. at

1920–21. The district court took this inequivalence and

proceeded to formulaically insert it into the parties’

agreement: if “class actions” are not equal to “non-

individual PAGA claims,” then “non-individual PAGA

claims” are not waived by a provision waiving “class

actions.” The problem is that words have “no arbitrary and

fixed meaning like a symbol of algebra or chemistry.”

Pearson v. State Soc. Welfare Bd., 353 P.2d 33, 39 (Cal.

1960). By treating the term “class or collective action” like

a fixed algebraic variable, the district court ignored the fact

that the Supreme Court’s distinction from Viking River

provides little insight into what Macy’s and Diaz intended

by their agreement, signed in 2012. See Swenson v. File, 475

P.2d 852, 854–55 (Cal. 1970) (holding that changes in law

subsequent to contracting “are not ordinarily deemed to

become part of the agreement unless [the agreement’s]

language clearly indicates this to have been the intention of

the parties”).

We must interpret the arbitration agreement free from

such after-acquired developments, looking rather to the

terms of the agreement and any indication of their meaning

at the time the parties entered it. We are convinced that at

14 DIAZ V. MACYS WEST STORES, INC.

the time of contracting, the parties consented only to

arbitration of claims relating to Diaz’s own employment.

The agreement is replete with references to the employee

herself and disputes “relating to [her] employment.” Diaz

was told that the arbitral process is available for “your

dispute[s]” based on “your situation.” The agreement also

discusses disputes as “asserted by the Associate against the

Company.” These are but a couple of examples of the

bilateral relationship between employer and individual

employee that the arbitration agreement presumes will frame

all arbitrable claims. Our conclusion is reinforced by the

exclusion of class and collective actions from arbitration.

Although the waiver does not specifically reference non-

individual PAGA claims, it does no violence to the

agreement to read non-individual PAGA claims as an

instance of a class or collective action.

Considered as a whole, the agreement’s language is

strongly indicative of an intent to exclude any amalgamation

of employees’ claims—including non-individual PAGA

claims—from arbitration. Definitionally, non-individual

claims do not relate to the aggrieved employee’s

employment but to the conduct of the employer vis-à-vis its

other employees. See Viking River, 142 S. Ct. at 1916. For

that reason, California courts have read language similar to

the words used in the agreement before us to preclude non-

individual arbitration. See, e.g., Nelsen v. Legacy Partners

Residential, Inc., 144 Cal. Rptr. 3d 198, 202, 210–11 (Cal.

Ct. App. 2012) (noting that “[n]o language evince[d] an

intent to allow class arbitration” where an agreement

referred solely to the employee and employer); see also

Walker v. Scoobeez, No. CV 18-06108 AB (RAOx), 2018

WL 11321932, at *3 (C.D. Cal. Aug. 22, 2018) (holding that

an agreement did not permit class arbitration where it

DIAZ V. MACYS WEST STORES, INC. 15

“repeatedly referr[ed] to Plaintiff in the singular and ma[de]

no reference to . . . other employees’ claims or disputes”).

In light of this context and the language of individual

disputes used throughout the instrument, we conclude that

the parties did not contemplate that non-individual PAGA

claims would be subject to arbitration per their agreement.

We therefore affirm the district court’s order compelling

arbitration only as to Diaz’s individual PAGA claims—

which were clearly within the scope of the agreement’s terms

as a dispute relating to Diaz’s employment. We vacate the

order as to the non-individual claims because the parties did

not consent to arbitration of those claims.

V. DISPOSITION OF THE NON-INDIVIDUAL

CLAIMS

Our conclusion as to the arbitrability of Diaz’s individual

PAGA claims is only half of the victory that Macy’s seeks.

It asks us to further instruct the district court on remand to

Macy’s points us to judicial interpretations—all unpublished—of

similar and contemporaneous class action waivers holding that such

waivers extend to non-individual PAGA claims. Both the District Court

for the Central District of California and the California Court of Appeal

have interpreted the very waiver language used by Macy’s to preclude

arbitration of such claims. See Quevedo v. Macy’s, Inc., 798 F. Supp. 2d

1122, 1141 (C.D. Cal. 2011); Teimouri v. Macy’s, Inc., No. D060696,

2013 WL 2006815, at *16–17 (Cal. Ct. App. May 14, 2013)

(unpublished). We too have assumed that a provision waiving arbitration

of “class or collective action[s]” applies to non-individual PAGA claims.

Sierra v. Oakley Sales Corp., 637 F. App’x 368, 369 (9th Cir. 2016)

(unpublished). Although these cases do not bind us as precedent, they

are probative of what parties who used the same words as the parties

before us likely meant with respect to the arbitrability of non-individual

PAGA claims. Indeed, two of these cases show what Macy’s itself

thought it was consenting to because it was a party to the cases involving

the same stock arbitration agreement.

16 DIAZ V. MACYS WEST STORES, INC.

dismiss the non-individual claims, following the example of

the Supreme Court in Viking River. 142 S. Ct. at 1925. We

cannot, consistent with fundamental principles of

federalism, do as Macy’s requests.

In deciding that the nonarbitrable non-individual claims

in Viking River had to be dismissed, the Supreme Court was

making its own judgment about California law. “[A]s we see

it,” the Court opined, “PAGA provides no mechanism to

enable a court to adjudicate non-individual PAGA claims

once an individual claim has been committed to a separate

proceeding.” Id. The Court read PAGA’s standing

requirement to mean that “a plaintiff can maintain non-

individual PAGA claims in an action only by virtue of also

maintaining an individual claim in that action.” Drawing

attention to the state-law character of this holding, Justice

Sotomayor added in concurrence: “Of course, if this Court’s

understanding of state law is wrong, California courts, in an

appropriate case, will have the last word.” Id. (Sotomayor,

J., concurring).

California, in fact, has had the last word. When the

parties submitted their briefs in this case, the California

Supreme Court had before it a case that invited it to

determine whether the Supreme Court’s treatment of non-

individual claims was consistent with a correct interpretation

of PAGA. That case, Adolph v. Uber Technologies, Inc., has

since been decided. 532 P.3d 682 (Cal. 2023). The

California Supreme Court held, as a matter of California law,

that the Supreme Court’s interpretation of PAGA standing in

Viking River was incorrect. Id. at 689–92. As the California

Supreme Court explained, “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.” Id. at 691. Accordingly,

DIAZ V. MACYS WEST STORES, INC. 17

“[s]tanding under PAGA is not affected by enforcement of

an agreement to adjudicate a plaintiff’s individual claim in

another forum.” Id.; see also id. at 693 (“When a case

includes arbitrable and nonarbitrable issues, the issues may

be adjudicated in different forums while remaining part of

the same action.”); 694 (“‘Even though Viking [River]

requires the trial court to bifurcate and order individual

PAGA claims to arbitration when an appropriate arbitration

agreement exists, the individual PAGA claims in arbitration

remain part of the same lawsuit as the representative claims

remaining in the court. Thus, plaintiffs are pursuing a single

PAGA action on behalf of [themselves] and other current or

former employees, albeit across two fora.’” (quoting Piplack

v. In-N-Out Burgers, 305 Cal. Rptr. 3d 405, 413 (Ct. App.

2023)). Adolph’s holding is the final and binding authority

on the meaning of PAGA. See Montana v. Wyoming, 563

U.S. 368, 377 n.5 (2011) (“The highest court of each State,

of course, remains ‘the final arbiter of what is state law.’”

(citation omitted)). We have recently acknowledged the

binding nature of that decision. Johnson, 93 F.4th at 464.

The result is that under Viking River, Diaz’s non-individual

PAGA claims cannot be referred to arbitration, as the district

court ordered, and after Adolph, those claims cannot be

dismissed, as Macy’s requests.

The combination of Viking River and Adolph places

Macy’s in an odd position. Having successfully shown that

the arbitration agreement in this case does not encompass

non-individual PAGA claims, Macy’s has opened the way

for Diaz to bring those claims in a separate court proceeding

that Macy’s surely did not desire. But there is no other

tenable outcome. The California Supreme Court has held

that the ability to bring non-individual PAGA actions cannot

be waived by agreement, because such a waiver would

18 DIAZ V. MACYS WEST STORES, INC.

frustrate the enforcement objectives of PAGA. Iskanian v.

CLS Transportation Los Angeles, LLC, 327 P.3d 129, 149

(Cal. 2014), abrogated on other grounds by Viking River,

142 S. Ct. at 1924. An aggrieved employee must have a

forum in which to bring non-individual PAGA actions.

Because the agreement between Macy’s and Diaz forecloses

arbitration of those claims, court is the only option

remaining.

A final question remains. What is the district court to do

with the non-individual PAGA claims in this case if they can

neither be arbitrated nor dismissed? Adolph contemplates

that nonarbitrable claims may either proceed in the judicial

forum in parallel with the arbitrated claims or be stayed

pending completion of the arbitration. 532 P.3d at 693. We

observe that the arbitration agreement between Macy’s and

Diaz addresses just the situation in which the parties now

find themselves. It requires that the party who files a lawsuit

raising both arbitrable and nonarbitrable claims request a

stay of litigation for the nonarbitrable claims pending

arbitration of the arbitrable claims. We therefore remand to

the district court with instruction to treat the nonarbitrable

non-individual claims consistent with Adolph, anticipating

that the parties will, per their agreement, request a stay with

respect to those claims.

In anticipation of Adolph, Macy’s preemptively argued in its briefs that

any interpretation of California law that is contrary to Viking River would

be preempted by the FAA. Given several intervening developments that

followed the district court’s judgment (including our decision in

Johnson), Macy’s may refine and renew these arguments before the

district court. We express no views on the merits of such arguments.

DIAZ V. MACYS WEST STORES, INC. 19

VI. CONCLUSION

The order of the district court is AFFIRMED as to the

arbitration of Diaz’s individual PAGA claims but

VACATED as to the arbitration of her non-individual

claims. We REMAND to the district court to dispose of the

nonarbitrable claims consistent with the California Supreme

Court’s decision in Adolph and the agreement of the parties.

Each party shall bear its own costs.

AFFIRMED in part; VACATED in part;

REMANDED.