Raef Lawson v. Grubhub, Inc.
13 F.4th 908 (2021)
Rule of Law:
California's 'ABC test' for worker classification applies retroactively to wage and overtime claims, and Proposition 22 does not abate these claims because it is not retroactive and does not unconditionally repeal the ABC test; furthermore, class action waivers preclude class certification under Rule 23(a) where the vast majority of putative class members signed such waivers.
Facts:
- Raef Lawson worked for Grubhub, Inc. as a food delivery driver in the Los Angeles area for four months between October 2015 and February 2016.
- Grubhub classified Lawson and all its delivery drivers as independent contractors, not employees.
- Lawson signed up for delivery shifts, called 'blocks,' and made deliveries on 59 of 69 days he signed up, being compensated based on his accepted deliveries.
- Grubhub offered a 'true up' hourly pay guarantee for blocks if a driver accepted a high percentage of delivery opportunities during that block.
- Lawson occasionally 'gamed' the Grubhub app by toggling available late, using airplane mode to avoid deliveries, or accepting and then reassigning deliveries.
- Grubhub terminated its agreement with Lawson in February 2016 because he did not perform delivery services during a high proportion of the blocks he had signed up for.
- Grubhub did not reimburse Lawson for expenses incurred for fuel or for his cell phone.
- Grubhub operated in 250 markets in California, offering delivery services in five of those markets, with most customers in those markets having orders delivered by restaurants rather than Grubhub drivers.
Procedural Posture:
- Andrew Tan, a Grubhub driver, brought a putative class action against Grubhub in state court under the California Labor Code, and a representative action under PAGA.
- Grubhub removed the case to federal court under the Class Action Fairness Act.
- The parties consented to magistrate judge jurisdiction, and Raef Lawson joined as a plaintiff, alleging failure to pay minimum wage, overtime, and reimburse expenses.
- The district court, upon a motion by Grubhub, denied class certification, finding Lawson atypical and an inadequate representative due to class action waivers signed by most putative class members.
- After the class action ruling, Tan dropped out of the suit, leaving Lawson as the sole plaintiff.
- The parties stipulated to bifurcate the trial, first on whether Lawson was misclassified, and second on PAGA penalties.
- The district court held a bench trial on the classification issue in September 2017.
- On February 8, 2018, the district court held that Lawson was properly classified as an independent contractor under the Borello test and granted judgment to Grubhub on all claims.
- Lawson (plaintiff-appellant) appealed the denial of class certification and the independent contractor ruling to the United States Court of Appeals for the Ninth Circuit.
- The Ninth Circuit stayed the appeal while California law underwent significant changes regarding the independent contractor/employee classification issue, specifically awaiting decisions in Dynamex and Vazquez.
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Issue:
1. Does the presence of class action waivers for nearly all putative class members preclude class certification under Federal Rule of Civil Procedure 23(a) for a proposed class of food delivery drivers? 2. Does California's 'ABC test' for worker classification apply retroactively to existing minimum wage and overtime claims rooted in wage orders, and does California Proposition 22 abate the application of this test to such claims? 3. Is the ABC test applicable to expense reimbursement claims under California Labor Code § 2802 for conduct predating AB 5's expansion of the test, requiring initial determination by the district court?
Opinions:
Majority - W. Fletcher
1. Yes, the presence of class action waivers for nearly all putative class members properly precludes class certification under Federal Rule of Civil Procedure 23(a). The district court correctly denied class certification because all but two of the proposed class members had signed agreements waiving their right to participate in a class action. As such, Lawson could not satisfy Rule 23(a)'s requirements of typicality and adequate representation, as he was in a unique position and the proceedings would be unlikely to generate common answers, consistent with the Ninth Circuit's holding in O’Connor v. Uber Technologies, Inc. 2. Yes, California's 'ABC test' for worker classification applies retroactively to existing minimum wage and overtime claims rooted in wage orders, and California Proposition 22 does not abate the application of this test to such claims. The California Supreme Court in Vazquez v. Jan-Pro Franchising International, Inc. held that the ABC test, established in Dynamex Operations W., Inc. v. Superior Court, applies retroactively to claims rooted in wage orders, finding that Dynamex did not change a settled rule and retroactivity serves public policy to protect workers. Proposition 22 does not apply retroactively as it lacks an express retroactivity provision and took effect prospectively. Furthermore, Proposition 22 did not abate Lawson's claims because his rights to unpaid wages, if he was an employee, vested when he performed the work, and Proposition 22 merely crafted a conditional and prospective exemption, rather than an unconditional repeal of the underlying statutory cause of action. 3. The court does not directly decide whether the ABC test applies to expense reimbursement claims under California Labor Code § 2802 for conduct predating AB 5's expansion of the test, but rather remands for the district court to determine this in the first instance. The California Supreme Court in Dynamex did not consider this specific issue, and while AB 5 expanded the ABC test to the entire Labor Code, that expansion took effect prospectively after Lawson's employment. Therefore, the applicability of the ABC test to expense reimbursement claims arising before January 1, 2020, requires an initial determination by the trial court.
Analysis:
This case significantly clarifies the application of California's ABC test for worker classification, particularly its retroactivity to wage and overtime claims. By affirming that Proposition 22 does not abate these claims, the court ensures that employers cannot easily escape liability for past misclassification based on subsequently passed legislation. The decision also reinforces the high bar for class certification when class action waivers are prevalent, emphasizing the importance of Rule 23(a) requirements even in the face of evolving substantive law regarding worker status. The remand for expense reimbursement claims signals continued judicial scrutiny on the full scope of ABC test applicability.
