Lawson v. Grubhub, Inc.

Background

Raef Lawson brought a representative action under California’s Private Attorneys General Act, or PAGA. He alleged that Grubhub Holdings Inc. and Grubhub Inc. failed to reimburse drivers for necessary work expenses and failed to pay minimum and overtime wages.

The parties divided the case into two phases. The first phase addressed Lawson’s individual claims and whether he qualified as an “aggrieved employee” under PAGA. After a bench trial, the court initially found that Lawson was an independent contractor under the Borello test and entered judgment for Grubhub. The Ninth Circuit later vacated and remanded that ruling after intervening legal developments.

After remand, the court ruled that the ABC test governed Lawson’s minimum-wage and overtime claims and that Grubhub had misclassified him as an independent contractor rather than an employee for those claims. Lawson had driven for Grubhub from October 2015 through February 2016.

Grubhub then moved for partial summary judgment. It argued that Lawson could seek PAGA penalties only for Labor Code violations occurring during his own period of work for Grubhub. It also argued that imposing PAGA penalties for conduct before the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court would violate due process because the retroactive application of the ABC test was allegedly unforeseeable.

PAGA Standing and the Time Period for Penalties

The court denied Grubhub’s argument that Lawson lacked statutory standing to pursue penalties for violations occurring outside the period when he personally worked for Grubhub. Under PAGA, an “aggrieved employee” is a person who worked for the alleged violator and against whom at least one alleged Labor Code violation was committed.

The court had already found that Lawson suffered minimum-wage violations. It therefore concluded that he met PAGA’s standing requirements. The court explained that PAGA does not limit a representative plaintiff to seeking penalties only for violations that occurred during the plaintiff’s own employment. A PAGA plaintiff may seek penalties for violations affecting other employees even when the plaintiff did not personally experience every alleged violation.

The court also distinguished decisions cited by Grubhub. In those cases, the plaintiffs were not aggrieved employees, their claims had been precluded, or the claims involved a different employer. Here, the court found that Lawson personally suffered a Labor Code violation and sought penalties for employees of his employer, Grubhub. The court therefore denied Grubhub’s motion on this issue.

Retroactive Application of Dynamex

The court also rejected Grubhub’s due-process challenge to imposing PAGA penalties for misclassification occurring before Dynamex. The California Supreme Court had held in Vazquez v. Jan-Pro Franchising International, Inc. that Dynamex applies retroactively to cases that were not yet final and governed by wage orders containing the relevant employee definition.

The court relied on Vazquez’s conclusion that employers had notice before Dynamex that employee classification could depend on the wage order’s “suffer or permit to work” standard and that the law was unsettled. The court also noted that Grubhub cited no case holding that civil penalties are unconstitutional in these circumstances.

The court distinguished cases involving criminal punishment and concluded that the cited authorities did not establish a due-process violation here. It held that Grubhub had not met its burden to show that imposing PAGA penalties for pre-Dynamex misclassification would violate due process.

Disposition

The court denied Grubhub’s motion for partial summary judgment. The order disposed of Docket No. 335. It did not determine a particular amount of PAGA penalties or state that all remaining issues in the case had been resolved.