Uber and Postmates Lose Move to Stop Enforcement of AB5
U.S. District Judge Dolly Gee rejected a motion for preliminary injunction that Uber and Postmates filed to put the brakes on enforcement of California's Assembly Bill 5, which sought to reclassify their drivers as employees.
February 10, 2020 at 06:06 PM
5 minute read
Uber and Postmates lost a court action to slam the brakes on potential enforcement of a California law that could force the ride-hailing firm to reclassify its drivers as employees.
In a Monday order, U.S. District Judge Dolly Gee of the Central District of California rejected a motion for preliminary injunction that Uber and Postmates filed over California's Assembly Bill 5, which sought to reclassify independent contractors in certain industries to employees in order to provide better wages and benefits while curbing what they considered exploitation of California's workers. Uber and Postmates insisted that the threat of enforcement by city and state officials required the judge to grant the motion.
Gee rejected that request, despite also finding that Uber and Postmates had presented evidence of "irreparable harm" given that California legislators had targeted ride-hailing firms when they passed the bill, which became effective Jan. 1.
"Plaintiffs have not shown serious questions going to the merits—the critical factor in determining whether to issue a preliminary injunction—and, though company plaintiffs have shown some measure of likelihood of irreparable harm, the balance of equities and the public interest weigh in favor of permitting the state to enforce this legislation," she wrote.
She ruled that Uber and Postmates had failed to prove they would succeed on the merits of their injunction claim, brought in a Dec. 30 lawsuit alleging that AB5 was unconstitutional because it violated the equal protection and due process clauses of the Fourteenth Amendment, the Ninth Amendment, the Contracts Clause, among other things.
Representatives of California Attorney General Xavier Becerra, whose office is defending the law in the lawsuit, said in an emailed statement: "We're pleased with the decision. Our office has and will continue to defend laws that are designed to protect workers and ensure fair labor and business practices."
Gibson, Dunn & Crutcher represented Uber and Postmates in the case.
In a statement, Postmates called Gee's ruling a "procedural decision" that "comes as a disappointment to the on-demand workers" who filed the suit. The statement said the decision could be appealed to the U.S. Court of Appeals for the Ninth Circuit.
"As witnessed by truckers, freelance journalists, and countless other occupations, AB5 is undercutting workers across the economy," the statement said, "and Postmates remains committed to the modernization of worker classification and worker protections."
The ruling follows a hearing Friday during which Gee appeared unconvinced by the arguments of Gibson Dunn partner Theane Evangelis, speaking for Uber and Postmates and two of their drivers serving as plaintiffs in the lawsuit.
Friday's hearing drew spectators from Mobile Workers Alliance and Rideshare Drivers United, both of which support AB5. The U.S. Chamber of Commerce and several others had filed amicus briefs supporting Uber and Postmates.
As at the hearing, Gee was not convinced that the state would enforce AB5 against Uber and Postmates, both of whom have challenged the law's application to them. That's despite her conclusion that both companies "established some measure of irreparable harm stemming from threatened municipal enforcement actions."
"Plaintiffs correctly point out, however, that the record contains some evidence that AB5 targeted company plaintiffs and other gig economy companies, and that some lawmakers' statements specifically complained about Uber," she wrote. "But such targeting, even if it rises to the level of animus toward gig economy companies, does not establish an equal protection violation where the statute addresses legitimate concerns of deleterious misclassification of workers in many industries, not just the gig economy."
That's especially true, she wrote, given that AB5 codified existing case law following the California Supreme Court's 2018 decision in Dynamex Operations W. v. Superior Court, which set up a test to determine whether employees should be independent contractors or employees.
Although the state did "not provide specific justifications for every exemption" in AB5, the explanations for those exemptions were rational because they involved the "hallmarks of independent status," she wrote. The judge found there were differences between ride-hail drivers and exempted direct salespersons, who chose their sales targets and locations, or movers who work for a business.
"Plaintiffs have not shown that their work arrangements are so similar to exempted work arrangements that exempting Uber and Postmates from AB5's application would further the state's interest in preventing misclassification of independent contractors," she wrote.
Also, AB5 did not prevent the individual Uber and Postmates drivers from continuing the same profession as employees.
Uber did not expand on its statement following Friday's hearing, which called AB5 a "biased and overtly political process that ignored the voices of the workers most affected by the law and granted preferential treatment to an arbitrary group of industries."
The case is one of at least three lawsuits filed to halt enforcement of AB5. On Jan. 16, U.S. District Judge Roger Benitez of the Southern District of California granted a preliminary injunction motion in a separate case brought by the California Trucking Association. In that case, he found that the plaintiff had raised a plausible argument that the Federal Aviation Administration Authorization Act of 1994 preempted AB5 as it pertained to motor carriers.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllDoorDash Seeks More Information About NLJ 500 Firm's Connections With Chicago
4 minute readMonster Energy Takes on Beast Bites Over Alleged Trademark Violations
4 minute readA Sliver of Forever Chemical Allegations Allowed to Proceed Against Prime Hydration Beverage, Judge Rules
4 minute readLaw Firms Mentioned
Trending Stories
- 1Infant Formula Judge Sanctions Kirkland's Jim Hurst: 'Overtly Crossed the Lines'
- 2Trump's Return to the White House: The Legal Industry Reacts
- 3Election 2024: Nationwide Judicial Races and Ballot Measures to Watch
- 4Climate Disputes, International Arbitration, and State Court Limitations for Global Issues
- 5Judicial Face-Off: Navigating the Ethical and Efficient Use of AI in Legal Practice [CLE Pending]
- 6How Much Does the Frequency of Retirement Withdrawals Matter?
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250