Lawson v. Grubhub, Inc.

Background

Raef Lawson brought a representative claim under California’s Private Attorneys General Act (PAGA). He alleged that Grubhub unlawfully classified food-delivery drivers as independent contractors and therefore failed to reimburse necessary expenses and pay minimum and overtime wages. After oral argument on Grubhub’s motion for partial summary judgment, the court requested supplemental briefing on Lawson’s constitutional standing to pursue penalties for overtime and expense violations suffered by other employees, and on the time period covered by the PAGA claim.

Standing for Overtime and Expense Penalties

The court held that binding Ninth Circuit precedent in Magadia v. Wal-Mart Associates, Inc. remained controlling. Under Article III of the Constitution, a plaintiff generally must show a concrete personal injury that was caused by the defendant and could be remedied by a court order. The court found that Lawson personally suffered no overtime or expense-reimbursement violation. He therefore lacked constitutional standing to pursue PAGA penalties for those types of violations suffered by other employees.

The court rejected Lawson’s argument that the Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana or the California Court of Appeal’s decision in Turrieta v. Lyft, Inc. had undermined Magadia. The court concluded that Viking River did not decide constitutional standing and that Turrieta did not contradict Magadia’s federal constitutional standing analysis.

Minimum-Wage Standing

The court found that Lawson personally suffered minimum-wage violations and therefore had standing to pursue PAGA penalties for minimum-wage violations arising from time spent performing deliveries, whether on-block or off-block, and time spent on-block while available and in-network.

The court found that Lawson lacked standing to pursue penalties for minimum-wage violations based on off-block time spent waiting for delivery requests because Lawson never worked off-block and therefore had no personal stake in whether that waiting time was compensable.

Grubhub also argued that Lawson lost standing for periods after April 2017 because of changes in delivery practices, including more off-block deliveries and increased numbers of ignored or declined delivery requests. The court disagreed on the current record. It found that off-block deliveries were possible during Lawson’s employment and that Grubhub had not shown that on-block drivers’ practical requirement to accept delivery requests changed after April 2017.

Requested Limitation Through April 2017

Grubhub asked the court to limit the PAGA penalty period through April 2017 based on its claimed good-faith compliance with the law and Lawson’s stated personal damages of $65.11. The court declined to do so. It found that Grubhub’s reliance on the earlier worker-classification standard did not establish the required basis for reducing penalties, and that Lawson’s personal damages did not necessarily reflect the seriousness of the alleged violations or the government’s interest in PAGA penalties.

The court also declined to use its inherent authority to limit the period through April 2017. It reasoned that the identified changes in work practices did not require a separate compensability analysis that would justify that limitation.

Proposition 22 and the PAGA Period

The court stated that Lawson likely lacked Article III standing to pursue penalties for minimum-wage violations occurring after December 16, 2020, when Proposition 22 took effect. The statute changed the criteria for classifying app-based drivers, and Lawson did not drive for Grubhub after that date. The court had not decided whether any post-Proposition 22 Grubhub driver was misclassified.

The court also viewed December 16, 2020, as a reasonable endpoint for the PAGA period because it would allow the court to apply a consistent classification analysis without conducting a new trial concerning compliance with Proposition 22. The court gave Lawson until February 21, 2024, to brief his standing after Proposition 22, and gave Grubhub until March 6, 2024, to respond. If Lawson did not file the brief, the order ending the PAGA period on Proposition 22’s effective date would remain.

Disposition

The court STAYED Lawson’s overtime and expense-reimbursement claims, as well as minimum-wage claims for violations occurring after Proposition 22 took effect, pending final adjudication of the remaining minimum-wage PAGA claim. The court stated that Lawson could pursue penalties for minimum-wage violations arising from time spent performing deliveries and time spent on-block, but not for off-block waiting time. The conclusion stated that the recoverable PAGA period was December 3, 2014, through December 16, 2020, subject to modification after Lawson’s further briefing. The order disposed of Docket No. 343.