Uber’s Suit Challenging Worker-Classification Law Revived
Ninth Circuit Says Challenge to AB 5 Which Renders ‘Gig Workers’ Employees Might Violate Equal Protection;
Decision Follows State C.A. Ruling Validating Initiative Rendering Such Workers Independent Contractors
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals on Friday reversed the dismissal of an action brought by Uber Technologies, Inc. and others to bar enforcement of California’s Assembly Bill 5 on the ground that, in compelling that those engaged in app-based ride-hailing and delivery services be classified as employees, while exempting from its reach persons who work in numerous other capacities, it violating the Equal Protection Clause.
That decision, favorable to Uber and others, comes on the heels of a state Court of Appeal opinion declaring valid, for the most part, a subsequent initiative that renders the workers for such companies independent contractors.
AB 5, enacted in 2019, codifies the standards for determining if a worker is an employee or an independent contractor that were laid down by the California Supreme Court the year before in Dynamex Operations West, Inc. v. Superior Court, but it extends exemptions to persons in various categories. AB 170 and AB 2257, which followed, created more exemptions.
The author of AB 5, then-Assembly member Lorena Gonzalez, D-San Diego, proclaimed that the bill would “guarantee...workers the normal rights and privileges—and benefits—enjoyed by most employees” that “ ‘gig’ companies such as Uber, Lyft, DoorDash, Handy and others” fail to provide to “ ‘gig’ workers.”
District Court Judge Dolly Gee of the Central District of California denied a preliminary injunction sought by Uber, Postmates, and two individuals and dismissed all of their claims. Circuit Judge Johnnie Rawlinson wrote for a three-judge panel in affirming the dismissal, excerpt as to the equal protection claim.
The applicable standard of review, she noted, is whether the challenged law has a rational basis. Rawlinson wrote:
“Even under this ‘fairly forgiving’ standard of review, we conclude that, considering the particular facts of this case Plaintiffs plausibly alleged that A.B. 5, as amended, violates the Equal Protection Clause for those engaged in app-based ride-hailing and delivery services.
“Plaintiffs plausibly allege that the primary impetus for the enactment of A.B. 5 was the disfavor with which the architect of the legislation viewed Uber, Postulates, and similar gig-based business models. However, the publicly articulated purpose of A.B. 5 was to ‘ensure [that] workers who are currently exploited by being misclassified as independent contractors instead of recognized as employees have the basic rights and protections they deserve.’…But, as Plaintiffs plausibly alleged, the exclusion of thousands of workers from the mandates of A.B. 5 is starkly inconsistent with the bill’s stated purpose of affording workers the ‘basic rights and protections they deserve.’ ”
‘Lobbying,’ ‘Backroom Dealing’
“The plausibility of Plaintiffs’ allegations is strengthened by the piecemeal fashion in which the exemptions were granted, and lends credence to Plaintiffs’ allegations that the exemptions were the result of ‘lobbying’ and ‘backroom dealing’ as opposed to adherence to the stated purpose of the legislation.”
Among those to whom AB 5 do not apply are lawyers, dentists, salespersons, barbers, travel agents, private investigators, cartoonists, dog walkers, and grant writers. Rawlinson said in a footnote:
“It is notable that during oral argument, counsel for Defendants was unable to articulate a conceivable rationale for A.B. 5 that explains the exemptions made by A.B. 5, as amended.”
The jurist that Gee “correctly dismissed Plaintiffs’ Due Process claims, Contract Clause claims, and Bill of Attainder claims.”
After Gee denied a preliminary injunction, the plaintiffs appealed to the Ninth Circuit. While that appeal was pending, a second amended complaint was filed including reference to Proposition 22, enacted by voters in 2020 as the “Protect App-Based Drivers and Services Act,” and A.B. 2257.
The initiative, partially abrogating AB 5, classifies those working for app-based transportation and delivery companies as independent contractors.
“Although we could review the district court’s order to determine whether it abused its discretion by denying Plaintiffs’ motion” for a preliminary injunction, Rawlinson said, “the more prudent course of action is a remand for the district court to reconsider Plaintiffs’ motion for a preliminary injunction, considering the new allegations contained in the Second Amended Complaint.”
The case is Olson v. State of California, 21-55757.
State Appellate Decision
On Monday of last week, Div. Four of the Fourth District Court of Appeal reversed, for the most part, a 2021 decision by Alameda Superior Court Judge Frank Roesch invalidating Proposition 22. Siding with the state, Acting Presiding Justice Tracie L. Brown wrote:
“We agree that Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule, but we conclude that the initiative’s definition of what constitutes an amendment violates separation of powers principles. Because the unconstitutional provisions can be severed from the rest of the initiative, we affirm the judgment insofar as it declares those provisions invalid and to the extent the trial court retained jurisdiction to consider an award of attorney’s fees, and otherwise reverse.”
That case is Castellanos v. State (Protect App-Based Drivers and Services), 2023 S.O.S. 952.
The Ninth Circuit decision permitting a renewed challenge in the District Court to AB 5 would be rendered moot if the First District’s decision stands or, if the California Supreme Court grants review, it declares Proposition 22 to be valid.
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