Grubhub Trial Judge Leaves Big Labor Question Unresolved Amid 'Dynamex' Dust-up
Magistrate Judge Jacqueline Scott Corley speaks at a candid Federal Bar Association event highlighting some judges and court procedures.
A San Francisco judge acknowledged a pivotal California Supreme Court decision would affect the outcome of a closely watched labor fight between Grubhub Inc. and a former delivery driver but declined to say whether the decision should be applied retroactively, a key question that gig companies want answered.
Magistrate Judge Jacqueline Scott Corley of the U.S. District Court for the Northern District of California issued an opinion Wednesday in response to a question from plaintiffs attorneys who contend Grubhub is misclassifying its workers as contractors and not employees. Corley in February ruled for Grubhub, and the case, brought by a driver named Raef Lawson, is now pending before the U.S. Court of Appeals for the Ninth Circuit.
The distinction between independent contractors and employees—who are entitled to benefits, workers' compensation and other rights—is key in the mountain of lawsuits filed against gig companies with workforces made up largely of freelance workers who set their own schedules.
Lawson's case was on appeal when the California Supreme Court in April embraced a more rigid standard that makes it harder for companies to classify their workers as contractors. The new standard, known as the ABC test, has the potential to upend the business model of gig economy companies, attorneys have said.
Lawson’s attorney Shannon Liss-Riordan has argued the Grubhub case should be remanded from the Ninth Circuit to the trial court because the new standard, announced in the case Dynamex Operations West v. Superior Court, would change the outcome of the February trial.
Corley, in her ruling Wednesday, said she agreed that the new standard under Dynamex would change the outcome of the trial but said she will not settle the larger question at play: whether the decision applies retroactively. Companies, including Grubhub, are fighting in court to stop the ruling from being applied to older cases.
“The pivotal question, then, is the retroactive effect of the Dynamex Court’s adoption of the ABC test to determine worker classification,” Corley wrote. “Even if the decision establishes a new rule of law, if there was no prior rule to the contrary the decision applies to cases not yet final, including cases on appeal.”
After its April ruling, the California Supreme Court denied, without explanation, various employer groups’ requests to clarify whether Dynamex applies only prospectively. Corley said the justices' order, however, is not definitive.
Corley acknowledged the question raises a “substantial issue” but declined to offer insight into how she would rule and said the court lacked the jurisdiction while the case is on appeal in the NInth Circuit. She notes that “there is some suggestion that the California courts will follow this general rule of retroactivity as to Dynamex.”
Grubhub's lawyers at Gibson, Dunn & Crutcher argued in court papers last month that California courts “decline to make new rules retroactive where doing so would violate the parties’ due process rights.” The company said that courts “routinely ‘decline to follow the standard rule when retroactive application of a decision would raise substantial concerns about the effects of the new rule on the general administration of justice, or would unfairly undermine the reasonable reliance of parties on the previously existing state of the law.”
Gibson Dunn partner Michele Maryott, a lawyer for Grubhub, did not immediately respond to request for comment Thursday.
Liss-Riordan said in an email Thursday that she plans to proceed with briefing and argument in the Ninth Circuit, and she will ask the appeals court to reverse the trial court’s ruling.
“In light of the fact that we have now begun the briefing at the Ninth Circuit in this case, I don’t think there would be any significant saving of time in asking that the case be sent back now to the trial court, rather than just have it decided at the Ninth Circuit,” she said.
Read more:
Will California's New Worker Classification Test Be Applied Retroactively?
Calif. Supremes Embrace Worker-Friendly Classification Test.
In Bellwether Gig Economy Case, Judge Rules Grubhub Driver Is Not an Employee
