Raef Lawson v. Grubhub, Inc. ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RAEF LAWSON, individually and on No. 18-15386
behalf of all other similarly situated
individuals, and in his capacity as D.C. No.
Private Attorney General 3:15-cv-05128-
Representative, JSC
Plaintiff-Appellant,
v. OPINION
GRUBHUB, INC.; GRUBHUB
HOLDINGS, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Jacqueline Scott Corley, Magistrate Judge, Presiding
Argued and Submitted June 9, 2021
Seattle, Washington
Filed September 20, 2021
Before: William A. Fletcher, Paul J. Watford, and
Daniel P. Collins, Circuit Judges.
Opinion by Judge W. Fletcher
2 LAWSON V. GRUBHUB
SUMMARY*
Class Certification / Employment Law
The panel affirmed the district court’s denial of class
certification, vacated the judgment for Grubhub, Inc. on the
minimum wage, overtime, and expense reimbursement
claims, and remanded for further proceedings in a diversity
action brought by a plaintiff food delivery driver for
Grubhub.
Grubhub classified the plaintiff as an independent
contractor rather than as an employee. The plaintiff alleged
he was misclassified, alleged violations of the California
Labor Code, and sought to represent a class of similarly
situated delivery drivers in California.
The panel held the district court properly denied
certification to plaintiff’s proposed class of delivery drivers
in California. All members of plaintiff’s putative class –
except plaintiff and one other – signed agreements waiving
their right to participate in a class action. Plaintiff could not
satisfy the requirement in Fed. R. Civ. P. 23(a) because he is
neither typical of the class nor an adequate representative, and
because the proceedings would be unlikely to generate
common answers. Plaintiff adduced no facts in addition to
those already considered by the district court that would
change the analysis as to class certification.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
LAWSON V. GRUBHUB 3
In Dynamex Operations W., Inc. v. Superior Court,
416 P.3d 1, 33–40 (Cal. 2018), the California Supreme Court
adopted an “ABC test” for classification of workers raising
claims rooted in California wage orders. In Vazquez v. Jan-
Pro Franchising International, Inc., 478 P.3d 1207 (Cal.
2021), the California Supreme Court held that the ABC test
applied retroactively to claims rooted in wage orders. The
panel rejected Grubhub’s contention that California
Proposition 22 “abated” the application of its ABC test to
plaintiff’s pending claims.
There is no dispute that plaintiff’s minimum wage and
overtime claims are rooted in wage orders. Because the
district court rendered its judgment before the California
Supreme Court decided Dynamex, it had no occasion to apply
the ABC test to plaintiff’s claims. The panel remanded to the
district court to apply the ABC test in the first instance.
The California Supreme Court in Dynamex did not
consider whether expense reimbursement claims under Cal.
Labor Code § 2802 were subject to the ABC test. The panel
remanded for the district court to decide in the first instance
whether the ABC test applied to plaintiff’s expense
reimbursement claim.
4 LAWSON V. GRUBHUB
COUNSEL
Shannon Liss-Riordan (argued) and Thomas Fowler, Lichten
& Liss Riordan P.C., Boston, Massachusetts, for Plaintiff-
Appellant.
Theane Evangelis (argued), Theodore J. Boutrous Jr.,
Dhananjay S. Manthripragada, Brandon J. Stoker, and
Samuel Eckman, Gibson Dunn & Crutcher LLP, Los
Angeles, California; Michele L. Maryott, Gibson Dunn &
Crutcher LLP, Irvine, California; for Defendants-Appellees.
Adam G. Unikowsky, Jenner & Block LLP, Washington,
D.C.; Steven P. Lehotsky and Janet Galeria, U.S. Chamber
Litigation Center, Washington, D.C.; for Amicus Curiae
Chamber of Commerce of the United States of America.
Bradley A. Benbrook and Stephen M. Duvernay, Benbrook
Law Group PC, Sacramento, California; Luke A. Wake,
NFIB Small Business Legal Center, Sacramento, California;
Fred J. Hiestand, General Counsel, Civil Justice Association
of California, Sacramento, California; for Amici Curiae
National Federal of Independent Business Small Business
Legal Center and Civil Justice Association of California.
LAWSON V. GRUBHUB 5
OPINION
W. FLETCHER, Circuit Judge:
For four months in late 2015 and early 2016, Raef
Lawson worked for Grubhub, Inc. as a food delivery driver in
the Los Angeles area. Grubhub classified Lawson as an
independent contractor rather than as an employee. Lawson
later sued Grubhub, arguing that he had been misclassified.
Contending that he had been an employee, he alleged causes
of action under the California Labor Code for failing to pay
minimum wage and overtime, and failing to reimburse
expenses. He sought to represent a class of similarly situated
delivery drivers in California, and sought penalties under
California’s Private Attorneys General Act (“PAGA”).
After denying class certification, the district court
bifurcated the trial into two parts. The first part addressed
whether Lawson was misclassified as an independent
contractor. The second part would have addressed whether
Grubhub owed PAGA penalties due to misclassification of its
drivers in California. After a bench trial on the first part, the
district court held that Lawson was properly classified as an
independent contractor under S.G. Borello & Sons, Inc. v.
Department of Industrial Relations, 769 P.2d 399 (Cal. 1989).
Because of its holding on the first part, the court did not reach
the PAGA penalty issue.
Lawson appealed the denial of class certification and the
holding that he was an independent contractor. We stayed his
appeal while California law underwent significant changes
with respect to the independent contractor/employee
classification issue.
6 LAWSON V. GRUBHUB
We have jurisdiction under 28 U.S.C. § 1291. We affirm
the denial of class certification, vacate the judgment for
Grubhub on Lawson’s minimum wage, overtime, and
expense reimbursement claims, and remand for further
proceedings.
I. Factual Background
We begin with a brief summary of the facts found by the
district court. Grubhub, Inc. is an internet food ordering
service that allows customers to order from local restaurants.
In 2016, Grubhub operated in 250 markets in California and
offered delivery services in five of those markets. Grubhub
had 4,000 delivery drivers in the state. It classified all of
them as independent contractors.
After a customer ordered food through its online platform,
Grubhub transmitted the order to the restaurant. Although
customers could pick up their own orders, the food was
typically delivered either by a restaurant delivery person or
by a Grubhub driver. In the five California markets where
Grubhub offered delivery services, the majority of customers
had their orders delivered by the restaurants. Of the
remainder, Grubhub’s drivers delivered most of the orders.
Grubhub drivers selected their shifts, or “blocks,” on a
weekly basis. Blocks lasted between two and five hours and
were scheduled around mealtimes. A driver was required to
sign up for a full block. When drivers “toggle[d] available”
during a scheduled block, the Grubhub app presented them
delivery opportunities that they could choose to accept.
Grubhub guaranteed a “true up” hourly pay for a given block
if a driver accepted a certain high percentage of delivery
opportunities offered during that block.
LAWSON V. GRUBHUB 7
Plaintiff Raef Lawson is an aspiring actor, writer, and
director in Los Angeles. In August 2015, Lawson signed up
to make food deliveries through Grubhub. His contract did
not restrict his ability to work for others or require him to be
available for a specific amount of time. Lawson signed up for
Grubhub blocks on 69 days between October 25, 2015, and
February 14, 2016, and he made deliveries on 59 of those
days. He was compensated for blocks totaling 35 hours in
November, 105 in December, 60 in January, and 43 in the
first two weeks of February. Grubhub did not reimburse
Lawson for expenses incurred for fuel or for his cell phone.
Lawson sometimes “gamed” the Grubhub app. For
example, on some days, he toggled himself available well
after the start of his scheduled block. He also sometimes
toggled himself available and then turned his cellphone on
airplane mode to render it “out of network” so that he would
not be scheduled additional deliveries. On other occasions,
he accepted a delivery and then contacted the driver hotline
to ask for it to be reassigned. During trial, Lawson claimed
that he “d[idn’t] really recall” having engaged in these
practices.
On February 15, 2016, Grubhub terminated its agreement
with Lawson because he had not performed delivery services
during a high proportion of the delivery blocks for which he
had signed up.
II. Procedural and Legal Background
In September 2015, Andrew Tan, a Grubhub driver in San
Francisco, brought a putative class action against Grubhub in
state court under the California Labor Code, as well as a
representative action under PAGA. See Cal. Lab. Code
8 LAWSON V. GRUBHUB
§ 2689 et seq. Grubhub removed to federal court under the
Class Action Fairness Act. See 28 U.S.C. § 1332(d)(2). The
parties consented to magistrate judge jurisdiction, and
Lawson joined as a plaintiff. Lawson alleged that Grubhub
failed to pay minimum wage in violation of Labor Code
§§ 1194, 1197, failed to pay a time-and-a-half premium for
hours worked in excess of forty hours per week or eight hours
per day in violation of Labor Code §§ 1194, 1198, 510, and
554, and failed to reimburse for necessary business expenses
in violation of Labor Code § 2802.
On a motion by Grubhub, the court denied class
certification. It observed that only two of Grubhub’s
thousands of delivery workers in California—Lawson and
one other—had opted out of the arbitration and class action
waiver. It held that Lawson did not satisfy the Rule 23(a)
requirements because he was atypical and not an adequate
representative—that is, he was in a “unique position” and
“would be unable to credibly make several procedural
unconscionability arguments.” Further, commonality was not
present because the proceedings would not be able to
generate common answers. After the class action ruling by
the court, Tan dropped out of the suit, leaving Lawson as the
sole plaintiff.
The parties stipulated to bifurcate the trial by focusing
first on whether Lawson was misclassified, and second on
whether Grubhub owes PAGA penalties for having
misclassified its California drivers. The 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 and
granted judgment to Grubhub on all claims. See Lawson v.
LAWSON V. GRUBHUB 9
Grubhub, Inc., 302 F. Supp. 3d 1071 (N.D. Cal. 2018). The
court applied the multi-factor test set out by the California
Supreme Court in Borello. The court noted that some of the
secondary Borello factors, including whether Lawson’s work
was “part of Grubhub’s regular business,” “favor[ed] an
employment relationship.” But the primary Borello
factor—the hiring entity’s “right to control” the
work—“weigh[ed] strongly” in favor of independent
contractor status because Grubhub did not control the manner
and means by which Lawson performed his food deliveries.
Because Lawson was an independent contractor, he was not
an “aggrieved employee” and could not pursue his PAGA
claims. Lawson timely appealed.
Three months later, the California Supreme Court adopted
the so-called ABC test for classification of workers raising
claims rooted in California wage orders, such as minimum
wage and overtime claims. See Dynamex Operations W., Inc.
v. Superior Court, 416 P.3d 1, 33–40 (Cal. 2018). Unlike the
Borello test, the ABC test puts the burden on the hiring entity
to show that its worker is not an employee. The hiring entity
must establish all three of the following: (A) that the worker
is free from the control and direction of the hiring entity in
performance of the work; (B) that the worker performs work
that is outside the usual course of the hiring entity’s business;
and (C) that the worker is customarily engaged in an
independently established business of the same nature as the
work performed. Id. at 35.
In September 2019, a panel of this court certified to the
California Supreme Court the question whether Dynamex
applies retroactively. Vazquez v. Jan-Pro Franchising Int’l,
Inc., 939 F.3d 1045, 1049 (9th Cir. 2019). We stayed this
appeal pending receipt of the answer.
10 LAWSON V. GRUBHUB
That same month, the California legislature passed
Assembly Bill No. 5 (“AB 5”), codifying and slightly
modifying the ABC test. See Cal. Lab. Code § 2775 et seq.1
First, AB 5 codified the ABC test for claims relating to wage
orders. Id. §§ 2775(b)(1), 2785(a). Second, it extended the
ABC test to apply more broadly to both the Labor Code and
the Unemployment Insurance Code. Id. § 2775(b)(1). The
extension was prospective, with an effective date of January
1, 2020. See id. § 2785(c). Third, it created several
exemptions from the ABC test. See id. §§ 2776–2784, e.g.,
id. § 2776 (exemption for a “bona fide business-to-business
contracting relationship”). These exemptions, unlike the rest
of AB 5, “shall apply retroactively to existing claims and
actions to the maximum extent permitted by law.” Id.
§ 2785(b).
In November 2020, California voters passed Proposition
22, which provides that, if certain conditions are met, “app-
based drivers” are independent contractors. Cal. Bus. & Prof.
Code § 7451. The conditions specified in Proposition 22
require hiring entities to provide certain benefits. For
example, hiring entities must provide workers with an
“[e]arnings [g]uarantee” of 120% of the minimum wage for
engaged time, as well as compensation for vehicle expenses
per engaged mile. See id. § 7453(a), (d)(4)(A)–(B). They
also must provide a healthcare subsidy of 100% of the
1
AB 5 was originally codified in § 2750.3 of the Labor Code, but in
September 2020, the California Legislature passed AB 2257, which
revised some of AB 5’s exemptions, created additional ones, and moved
it to § 2775 et seq.
LAWSON V. GRUBHUB 11
average Covered California2 premium to workers engaged an
average of 25 or more hours per week, and 50% of the
average premium to workers engaged an average of 15 to
25 hours per week. Id. § 7454(a)(1), (2). Hiring entities must
also carry insurance coverage and provide some disability
coverage. Id. § 7455. There is nothing in the text of
Proposition 22 stating that it is retroactive. Proposition 22
took effect prospectively on December 16, 2020, under the
default rule in the California Constitution. See Cal. Const.
art. II, § 10(a).
In January 2021, the California Supreme Court held in
Vazquez v. Jan-Pro Franchising International, Inc., 478 P.3d
1207 (Cal. 2021), that the ABC test applies retroactively to
claims rooted in wage orders. After the decision in Vazquez,
we lifted the stay in this case and set it for argument. We
grant all three motions for judicial notice (DE 63, 83, and 87).
We deny as moot Jeffrey Grant’s motion to become amicus
(DE 33) because his brief concerns an issue that has been
conclusively resolved.
III. Analysis
We review a class certification decision de novo for legal
error. If there was no legal error, we review for abuse of
discretion. Sali v. Corona Reg’l Med. Ctr., 909 F.3d 996,
1002 (9th Cir. 2018). We review de novo conclusions of law
made after a bench trial. Saltarelli v. Bob Baker Grp. Med.
Tr., 35 F.3d 382, 385 (9th Cir. 1994).
2
Covered California is California’s health care exchange established
under the Affordable Care Act.
12 LAWSON V. GRUBHUB
In cases where state law applies, federal courts must
“ascertain from all the available data what the state law is and
apply it.” West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237
(1940). Where there is no decision by the California
Supreme Court, we are generally “bound by . . . the ruling of
the highest state court issued to date.” Poublon v. C.H.
Robinson Co., 846 F.3d 1251, 1266 (9th Cir. 2017). “A state
appellate court’s announcement of a rule of law is a datum for
ascertaining state law which is not to be disregarded by a
federal court unless it is convinced by other persuasive data
that the highest court of the state would decide otherwise.”
Miller v. Cnty. of Santa Cruz, 39 F.3d 1030, 1036 n.5 (9th
Cir. 1994) (citation and quotation marks omitted).
A. Class Certification
The district court properly denied certification to
Lawson’s proposed class of delivery drivers in California. In
O’Connor v. Uber Technologies, Inc., 904 F.3d 1087, 1094
(9th Cir. 2018), we decertified a class because it “include[d]
drivers who entered into agreements to arbitrate their claims
and to waive their right to participate in a class action with
regard to those claims.” The case before us is even less
worthy of certification than O’Connor. All members of
Lawson’s putative class—except Lawson and one
other—signed agreements waiving their right to participate in
a class action. The district court correctly held Lawson could
not satisfy the requirements in Rule 23(a) because he is
neither typical of the class nor an adequate representative, and
because the proceedings would be unlikely to generate
common answers.
Lawson makes several unavailing arguments in an
attempt to evade O’Connor. He first argues that there was no
LAWSON V. GRUBHUB 13
class waiver by the other putative class members. However,
the record is clear that they waived the right “to have any
dispute or claim brought between or among them, [or] heard
or arbitrated as a class action.” He also argues that the order
denying class certification was premature because he had not
yet moved for certification. But Rule 23 allows a preemptive
motion by a defendant to deny class certification. Vinole v.
Countrywide Home Loans, Inc., 571 F.3d 935, 939 (9th Cir.
2009). Lawson adduces no facts in addition to those already
considered by the district court that could change the court’s
analysis as to class certification.
B. Retroactivity of the ABC Test
For many years, Borello supplied the framework under
California law for determining whether a worker was an
employee or an independent contractor. Borello analyzed
several common-law factors, of which the most important
was the hiring entity’s “right to control the work,” to
conclude that farmworkers were employees for the purposes
of California’s workers’ compensation statute. Borello,
769 P.2d at 403–07. Borello did not address claims arising
from California wage orders.
In April 2018, shortly after the district court entered
judgment in this case, the California Supreme Court held that
Borello does not apply to claims rooted in California wage
orders. See Dynamex, 416 P.3d at 40. At issue in Dynamex
was a claim rooted in a wage order that “impose[d]
obligations relating to the minimum wages, maximum hours,
and a limited number of very basic working conditions.” Id.
at 5. The Court observed that the Borello multifactor test
made ex ante determinations difficult and allowed hiring
entities to evade their statutory responsibilities. Id. at 33–34.
14 LAWSON V. GRUBHUB
The Court formulated the new ABC test applicable to wage
order cases. Under the ABC test, a worker is properly
classified as an employee unless the hiring entity establishes
all three of the following factors:
(A) that the worker is free from the control
and direction of the hiring entity in connection
with the performance of the work, both under
the contract for the performance of the work
and in fact; and
(B) that the worker performs work that is
outside the usual course of the hiring entity’s
business; and
(C) that the worker is customarily engaged in
an independently established trade,
occupation, or business of the same nature as
the work performed.
Id. at 35.
As noted above, the California Supreme Court
subsequently held that the ABC test applies retroactively. See
Vazquez, 478 P.3d 1207 (Cal. 2021). The Court noted that
Dynamex addressed a matter of first impression and “did not
change a settled rule on which the parties below had relied.”
Id. at 1209. Retroactive application was also supported by
“public policy and fairness concerns, such as protecting
workers and benefitting businesses that comply with the wage
order obligations.” Id.
LAWSON V. GRUBHUB 15
C. Abatement
Despite the California Supreme Court’s holding in
Vazquez that Dynamex is retroactive, Grubhub insists that
Proposition 22 “abated” the application of its ABC test to
Lawson’s pending claims. We disagree.
We conclude without difficulty that Proposition 22 does
not apply retroactively. California has a settled presumption
against interpreting statutes—including ballot
propositions—as having retroactive application. “[I]n the
absence of an express retroactivity provision, a statute will
not be applied retroactively unless it is very clear from
extrinsic sources that the Legislature or the voters must have
intended a retroactive application.” Evangelatos v. Superior
Ct., 753 P.2d 585, 598 (Cal. 1988). Proposition 22 does not
purport to be retroactive, and it took effect on December 16,
2020, in accordance with the default rule in the California
Constitution. See Cal. Const. art. II, § 10(a). Indeed,
Grubhub does not argue that Proposition 22 is retroactive.
Even though Proposition 22 operates only prospectively,
Grubhub insists that its passage prevents collection of
employment benefits owed under the ABC test unless those
benefits were reduced to judgment before the passage of
Proposition 22. Grubhub points to a line of cases holding that
statutory causes of action are abated when the statute
providing the cause of action is repealed before the plaintiff
obtains a judgment. “Although the courts normally construe
statutes to operate prospectively, the courts correlatively hold
under the common law that when a pending action rests
solely on a statutory basis, and when no rights have vested
under the statute, a repeal of (the) statute without a saving
clause will terminate all pending actions based thereon.”
16 LAWSON V. GRUBHUB
Governing Bd. of Rialto Unified Sch. Dist. v. Mann, 558 P.2d
1, 6 (Cal. 1977); see also S. Serv. Co. v. Los Angeles Cnty.,
97 P.2d 963, 970 (Cal. 1940) (“The unconditional repeal of
a special remedial statute without a saving clause stops all
pending actions where the repeal finds them.” (emphasis
added)); Daghlian v. DeVry Univ., Inc., 574 F.3d 1212, 1213
(9th Cir. 2009) (dismissing the plaintiff’s pending claims
because they were wholly dependent on a California statute
that was repealed without a savings clause). But see
3 B. Witkin, Cal. Proc., 5th Actions § 20 (describing the
abatement doctrine and noting that “this theoretical rule
seldom operates in practice”).
A California Court of Appeal has provided a four-factor
test to determine whether a claim is abated. See Zipperer v.
Cnty. of Santa Clara, 35 Cal. Rptr. 3d 487, 494 (2005).
Plaintiffs in Zipperer brought a negligence claim against
Santa Clara County, arguing that the county had violated a
legal duty under California’s Solar Shade Control Act not to
plant vegetation, or to allow vegetation to grow, that would
shade solar panels located on adjacent properties. Id. at 490,
492. The county owned a park adjacent to plaintiffs’ property
and had allowed trees to grow tall enough to shade plaintiffs’
solar panels. However, two years before plaintiffs filed their
claims, the county had passed an ordinance exempting itself
from coverage under the Act pursuant to a provision allowing
local governments to do so. Id. at 492, 493 n.4. To
determine whether the ordinance abated the plaintiffs’ claim
under the Act, Zipperer focused on four factors: (1) “the
statutory nature of the plaintiffs’ claim”; (2) “the unvested
nature of the plaintiffs’ claimed rights”; (3) “the timing of the
elimination of those rights”; and (4) “the nature of the
mechanism by which the right of action was eliminated.” Id.
at 494. The Court of Appeal found that the duty to avoid
LAWSON V. GRUBHUB 17
shading adjacent properties was entirely of statutory origin;
that plaintiffs’ rights were unvested at the time of the passage
of the ordinance; that plaintiffs’ rights under the Act had been
eliminated before judgment; and that plaintiffs’ rights had
been fully eliminated by the ordinance. It thus held that the
ordinance abated plaintiffs’ rights under the Act and
dismissed the claim. Id. at 493–96.
The first Zipperer factor, whether the cause of action is
statutory, slightly favors a conclusion that Lawson’s claims
are abated. Labor Code claims are primarily statutory. See
Dynamex, 416 P.3d at 31–32 (describing the legislative
purposes of California’s wage and hour statutes). However,
we agree with Lawson that it is debatable whether his claims
“rest[] solely on a statutory basis,” for his minimum wage and
overtime claims have roots in the common law. Mann,
558 P.2d at 6 (emphasis added); see Zipperer, 35 Cal. Rptr.
3d at 494 (emphasizing that the plaintiffs’ Solar Shade
Control Act claims were “wholly” statutory and that the
plaintiffs “possessed no right or remedy . . . which existed
apart from the statute itself” (quoting S. Serv. Co., 97 P.2d at
969)); Brown v. Crown Gold Milling Co., 89 P. 86, 89 (Cal.
1907) (a wage laborer may recover the reasonable value of
his labor under a quantum meruit theory). However, despite
their common-law roots, the claims in their present form are
statutory and the Legislature or the voters are free to wholly
repeal them.
The second factor strongly counsels against abatement
because, unlike the plaintiffs in Zipperer, Lawson had “vested
or contractual” rights. Zipperer, 35 Cal. Rptr. 3d at 494.
Many statutory remedies, such as benefits under a worker’s
compensation statute, remain unvested until final judgment.
See Graczyk v. Workers’ Comp. Appeals Bd., 229 Cal. Rptr.
18 LAWSON V. GRUBHUB
494, 500–01 (1986). However, unpaid wages are vested
property rights under the California Labor Code. See Cortez
v. Purolator Air Filtration Prod. Co., 999 P.2d 706, 709 (Cal.
2000) (overtime wages unlawfully withheld by an employer
in violation of the Labor Code are “property to which the
employees were entitled”); accord Pineda v. Bank of Am.,
N.A., 241 P.3d 870, 878 (Cal. 2010) (“The vested interest in
unpaid wages . . . arises out of the employees’ action, i.e.,
their labor.”); Reyes v. Van Elk, Ltd., 56 Cal. Rptr. 3d 68, 73
(2007) (rights to unpaid wages are “vested property rights”
(citation omitted)). Thus, if, as he claims, Lawson was an
employee under the ABC test, his rights vested when he
performed the work and was entitled to be paid.
Because Proposition 22 went into effect “before [the]
judgment [became] final,” the third factor—timing of the
elimination of the right—could potentially support a finding
of abatement. Zipperer, 35 Cal. Rptr. 3d at 494. But this
factor matters little where, as here, the right already vested.
The fourth factor—the “mechanism by which the right of
action is abolished”—also counsels against abatement. See
Zipperer, 35 Cal. Rptr. 3d at 495. Grubhub argues that the
phrase in Proposition 22 that reads “[n]otwithstanding any
other provision of law, including . . . the Labor Code”
abolished the ABC test. Cal. Bus. & Prof. Code § 7451. But
Proposition 22 did not wholly abolish causes of action under
the ABC test. Rather, it crafted a conditional and prospective
exemption from the test for some workers. Proposition 22
neither changed the underlying Labor Code provisions
governing these claims nor “changed the portion of AB-5 that
set forth the ABC test itself.” Cal. Trucking Ass’n v. Bonta,
996 F.3d 644, 651 n.5 (9th Cir. 2021). It merely “provides
that app-based drivers . . . are independent contractors if
LAWSON V. GRUBHUB 19
certain conditions are met.” Id. (emphasis added). Indeed,
given that most of the text of Proposition 22 consists of these
“conditions,” any supposed repeal is by definition not
“unconditional.” S. Serv. Co., 97 P.2d at 970.
We therefore conclude that Proposition 22 did not abate
Lawson’s claims under the ABC test.
D. Minimum Wage and Overtime Claims
As noted above, Vazquez held that the ABC test applies
retroactively to claims rooted in wage orders. There is no
dispute that Lawson’s minimum wage and overtime claims
are rooted in wage orders.
Because the district court rendered its judgment before the
California Supreme Court decided Dynamex, it had no
occasion to apply the ABC test to Lawson’s claims. Lawson
asks us to apply the ABC test ourselves rather than remand it
to the district court to apply in the first instance. He argues
that Grubhub clearly cannot satisfy the “B” prong of the test
because food delivery work is obviously not “outside the
usual course of [Grubhub’s] business.” Dynamex, 416 P.3d
at 35. This issue was litigated below because—as noted in
Vazquez—“the three elements of the ABC test are prominent
factors already listed in Borello.” 478 P.3d at 1214. At trial,
Grubhub contended that food deliveries were outside the
regular course of its work because, as its Chief Operating
Officer testified, the company was simply an “online take-out
marketplace.” The district court rejected this argument in
applying the Borello factors: “[A]t the time Mr. Lawson
drove for Grubhub[,] food delivery was part of Grubhub’s
regular business in Los Angeles.” Lawson, 302 F. Supp. 3d
at 1090.
20 LAWSON V. GRUBHUB
We nonetheless prefer to remand to the district court to
apply the ABC test in the first instance. First, we do so
because “remand is necessary anyway” on other claims. See
Parada v. E. Coast Transp. Inc., 277 Cal. Rptr. 3d 89, 96, 97
(2021) (remanding even though the defendant “appear[ed]
unlikely” to succeed under the ABC test). Second, as we
noted above, the exemptions in AB 5 apply retroactively to
existing claims “to the maximum extent permitted by law.”
Cal. Lab. Code § 2785(b). On remand, Grubhub will have the
opportunity to show that one of these exemptions applies to
its relationship to Lawson.
E. Expense Reimbursement Claim
The California Supreme Court in Dynamex did not
consider whether expense reimbursement claims under Labor
Code § 2802 are subject to the ABC test. See Dynamex,
416 P.3d at 7 n.5 (noting that the plaintiffs “did not seek
review of that aspect of the Court of Appeal decision”). AB 5
expanded the application of the ABC test to the rest of the
Labor Code, but that expansion took effect only on January 1,
2020—long after Lawson stopped working for Grubhub. Cal.
Lab. Code § 2785(c). Neither Dynamex nor AB 5 clearly
settles whether the ABC test should be applied to Lawson’s
expense reimbursement claim.
The California Courts of Appeal have not squarely
decided whether the ABC test applies to expense
reimbursement claims arising out of conduct prior to January
1, 2020. See, e.g., Gonzales v. San Gabriel Transit, Inc.,
253 Cal. Rptr. 3d 681, 708 (2019), review dismissed,
481 P.3d 1144 (Cal. 2021) (remanding reimbursement claims
with instructions to “evaluate which Labor Code claims
enforce wage order requirements” and to apply the ABC test
LAWSON V. GRUBHUB 21
to those that do). As the Court of Appeal did in Gonzales, we
allow the trial court to decide in the first instance whether the
ABC test applies to Lawson’s expense reimbursement claim.
Conclusion
We affirm the denial of class certification, vacate the
judgment for Grubhub on the minimum wage, overtime, and
expense reimbursement claims, and remand for further
proceedings consistent with this opinion.
AFFIRMED in part, VACATED in part, and
REMANDED. The parties shall bear their own costs on
appeal.