“The effect would 22 be to make conduct that was not subject to criminal contempt sanctions at the time it was 23 committed contemptuous. This we may not do.”
How later courts described this case
- “The effect would 22 be to make conduct that was not subject to criminal contempt sanctions at the time it was 23 committed contemptuous. This we may not do.”
- defining scope of privilege as a matter of law
- “[i]n a lawsuit brought under the act, the employee plaintiff 7 represents the same legal right and interest as state labor law enforcement agencies—namely, 8 recovery of civil penalties that otherwise would have been assessed and collected by the Labor 9 Workforce Development Agency”
Written by the judges who cited it.
The opinion
1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 RAEF LAWSON, individually and in his Case No. 15-cv-05128-JSC
capacity as Private Attorney General
8 Representative,
ORDER RE: DEFENDANTS’ MOTION
9 Plaintiff, FOR PARTIAL SUMMARY
JUDGMENT
v.
10
Re: Dkt. No. 335
11 GRUBHUB, INC., et al.,
Defendants.
12
13 Raef Lawson (Lawson), on a representative basis under California’s Private Attorneys
14 General Act, Cal. Lab. Code. § 2698 et seq., alleges Grubhub Holdings Inc. and Grubhub Inc.
15 (Grubhub) violated California law by failing to reimburse its drivers for necessary expenditures
16 incurred during performance of their duties, pay minimum wage, and pay overtime wages. (Dkt.
17 No. 41 ¶ 33.)1 Before the Court is Grubhub’s motion for partial summary judgment. (Dkt. No.
18 335.) Having carefully considered the briefing, and with the benefit of oral argument on
19 September 7, 2023, the Court DENIES Grubhub’s motion. Grubhub has not established Lawson
20 lacks statutory standing to pursue PAGA penalties for delivery drivers who suffered Labor Code
21 violations during times other than the four months Lawson drove for Grubhub. It has also not
22 shown applying Dynamex retroactively to award PAGA penalties violates due process.
23 BACKGROUND
24 Lawson applied to deliver for Grubhub in August 2015 and performed deliveries between
25 October 2015 and February 2016 in Southern California. (Dkt. No. 313 at 4.) On December 3,
26 2015, Lawson submitted written notice to the Labor and Workforce Development Agency
27
1 detailing Grubhub’s alleged violations of the California Labor Code. (Dkt. No. 41 ¶ 35.)
2 The parties stipulated to bifurcate this case into two phases. (Dkt. No. 122.) Phase I was
3 limited to Lawson’s individual claims and the issue of whether Lawson qualifies as an “aggrieved
4 employee” under California’s Private Attorneys General Act (PAGA). (Id. at 3.) After a bench
5 trial for Phase I, the Court found Lawson was properly classified as an independent contractor
6 under the Borello standard and entered judgment in Grubhub’s favor. (Dkt. Nos. 221 at 17-33,
7 222.) See Lawson v. Grubhub, Inc. (“Lawson I”), 302 F. Supp. 3d 1071 (N.D. Cal. 2018), vacated
8 and remanded, 13 F.4th 908 (9th Cir. 2021); S.G. Borello & Sons, Inc. v. Dep’t of Indus.
9 Relations, 769 P.2d 399 (Cal. 1989). Lawson appealed the Court’s order and accompanying
10 judgment to the Ninth Circuit. (Dkt. No. 226.)
11 After a series of intervening developments in the law, the Ninth Circuit remanded the case
12 to this Court for further proceedings on Lawson’s minimum wage, overtime, and expense
13 reimbursement claims. (Dkt. No. 250.) See Lawson v. Grubhub, Inc. (“Lawson II”), 13 F.4th 908,
14 912-13, 916 (9th Cir. 2021). Following remand, the Court found the ABC test, not Borello,
15 governed Lawson’s minimum wage and overtime claims, and Grubhub misclassified Lawson as
16 an independent contractor instead of an employee for purposes of his minimum wage and overtime
17 claims. (Dkt. No. 313 at 17, 34.) See Cal. Lab. Code § 2775(b) (codifying ABC test); Vazquez v.
18 Jan-Pro Franchising Int’l, Inc., 478 P.3d 1207, 1215-16 (Cal. 2021); Dynamex Operations W. v.
19 Superior Court, 416 P.3d 1, 40 (Cal. 2018).
20 The Court having found Lawson was misclassified, Grubhub now argues the time period
21 for which Lawson may seek PAGA penalties must be limited to the span of his Grubhub
22 employment—that is, October 2015 to February 2016. Grubhub also argues the Court cannot
23 impose any PAGA penalties for Labor Code violations that occurred prior to the California
24 Supreme Court’s Dynamex decision because to do so would violate its due process rights.
25 DISCUSSION
26 The purpose of partial summary judgment “is to isolate and dispose of factually
27 unsupported claims or defenses.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Under
1 no genuine dispute of material fact and Grubhub is entitled to judgment as a matter of law. Fed.
2 R. Civ. P. 56. In ruling on a motion for partial summary judgment, the Court must “view the
3 evidence presented through the prism of the substantive evidentiary burden.” Anderson v. Liberty
4 Lobby, Inc., 477 U.S. 242, 254 (1986). The evidence of the non-movant is to be believed, and all
5 justifiable inferences are to be drawn in the non-movant’s favor. Id. at 255. The Court defers to
6 neither party in resolving purely legal questions raised on summary judgment. See, e.g., Edwards
7 v. Aguillard, 482 U.S. 578, 595–96 (1987) (concluding the district court did not err in granting
8 summary judgment based on its interpretation of legislative intent); Dorsey v. Nat’l Enquirer, Inc.,
9 973 F.2d 1431, 1434 (9th Cir. 1992) (defining scope of privilege as a matter of law).
10 I. Temporal Scope of PAGA Penalties
11 Lawson sues under PAGA “as the proxy or agent of [California’s] labor law enforcement
12 agencies.” Kim v. Reins Int’l California, Inc., 9 Cal. 5th 73, 81 (2020) (cleaned up); see also id.
13 (“Every PAGA claim is ‘a dispute between an employer and the state.’”); Magadia v. Wal-Mart
14 Assocs., Inc., 999 F.3d 668, 675 (9th Cir. 2021) (“PAGA authorizes an aggrieved employee to
15 recover a ‘civil penalty’ that could have otherwise been ‘assessed and collected by’ California’s
16 Labor & Workforce Development Agency”). “A PAGA representative action is therefore a type
17 of qui tam action, conforming to all traditional criteria, except that a portion of the penalty goes
18 not only to the citizen bringing the suit but to all employees affected by the Labor Code violation.”
19 Id. (cleaned up).
20 Grubhub insists Lawson, as the state’s agent, is limited to seeking PAGA penalties for
21 Labor Code violations that occurred during his Grubhub employment: October 2015 to February
22 2016. Whether Grubhub is correct “rests on PAGA’s language, its underlying purpose, and the
23 legislative intent.” Kim v. Reins Int’l California, Inc., 9 Cal. 5th 73, 83 (2020).
24 PAGA’s language gives “an aggrieved employee” the right to bring a lawsuit to collect
25 civil penalties “on behalf of himself or herself and other current or former employees.” Cal. Lab.
26 Code § 2699(a); Amalgamated Transit Union, Loc. 1756, AFL-CIO v. Superior Ct., 46 Cal. 4th
27 993, 1003 (2009) (“The act permits a civil action ‘by an aggrieved employee on behalf of himself
1 provisions of the Labor Code.”). An “‘aggrieved employee’ is any person who was employed by
2 the alleged violator and against whom one or more of the alleged violations was committed.” Cal.
3 Lab. Code § 2699(c). Thus, the plain language of § 2699(c) establishes only two requirements for
4 PAGA standing: 1) the plaintiff must be an aggrieved employee 2) against whom one or more of
5 the alleged violations was committed. Kim, 9 Cal. 5th at 83-84.
6 As the Court found, Lawson suffered minimum wage violations (Dkt. No. 313 at 28-30,
7 34), so he satisfies these two requirements. See id. (“Kim was employed by Reins and alleged that
8 he personally suffered at least one Labor Code violation on which the PAGA claim is based. Kim
9 is thus an ‘aggrieved employee’ with standing to pursue penalties on the state’s behalf.”). Nothing
10 in the statute limits a PAGA plaintiff from recovering PAGA penalties for Labor Code violations
11 that occurred before or after the plaintiff’s employment. To the contrary, a PAGA plaintiff may
12 recover penalties for aggrieved employees who suffered violations the plaintiff never personally
13 suffered. Cal. Lab. Code § 2699(c) (“against whom one or more of the alleged violations was
14 committed.”); Kim, 9 Cal. 5th at 84 (“The Legislature defined PAGA standing in terms of
15 violations, not injury. Kim became an aggrieved employee, and had PAGA standing, when one or
16 more Labor Code violations were committed against him.”). Indeed, “PAGA standing is not
17 inextricably linked to the plaintiff’s own injury. Employees who were subjected to at least one
18 unlawful practice have standing to serve as PAGA representatives even if they did not personally
19 experience each and every alleged violation.” Kim, 9 Cal. 5th at 85.
20 This conclusion is consistent with PAGA’s purpose. “The Legislature’s sole purpose in
21 enacting PAGA was to augment the limited enforcement capability of the [Labor and Workforce
22 Development Agency] by empowering employees to enforce the Labor Code as representatives of
23 the Agency.” Kim, 9 Cal. 5th at 86; see also Arias v. Superior Ct., 46 Cal. 4th 969, 986 (2009)
24 (“The act’s declared purpose is to supplement enforcement actions by public agencies, which lack
25 adequate resources to bring all such actions themselves.”); Adolph v. Uber Techs., Inc., 532 P.3d
26 682, 685 (2023) (“Informed by findings of pervasive underenforcement of many Labor Code
27 provisions and a shortage of government resources to pursue enforcement, the Legislature enacted
1 acting as private attorneys general, to recover those penalties.” (cleaned up)). Representative
2 PAGA claims are “legally and conceptually different from an employee’s own suit for damages
3 and statutory penalties” because “[e]very PAGA claim is a dispute between an employer and the
4 state.” Kim, 9 Cal. 5th at 81.
5 Properly understood, Lawson’s PAGA claim is an action between California and Grubhub.
6 See Arias, 46 Cal. 4th at 986 (“[i]n a lawsuit brought under the act, the employee plaintiff
7 represents the same legal right and interest as state labor law enforcement agencies—namely,
8 recovery of civil penalties that otherwise would have been assessed and collected by the Labor
9 Workforce Development Agency”); Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906, 1910,
10 reh’g denied, 143 S. Ct. 60 (2022) (“By its terms, PAGA authorizes any ‘aggrieved employee’ to
11 initiate an action against a former employer ‘on behalf of himself or herself and other current or
12 former employees’ to obtain civil penalties that previously could have been recovered only by the
13 State in an enforcement action brought by California’s Labor and Workforce Development
14 Agency”). As the Supreme Court of California explained in Kim and reiterated in Adolph, “[a]n
15 interpretation of the statute that impedes an employee’s ability to prosecute his or her employer’s
16 violations committed against other employees would undermine PAGA’s purpose of augmenting
17 enforcement of the Labor Code.” Adolph, 532 P.3d at 692; Kim, 9 Cal. 5th at 87 (“Hurdles that
18 impede the effective prosecution of representative PAGA actions undermine the Legislature’s
19 objectives.”). Consequently, a representative PAGA plaintiff’s standing is neither limited to
20 redressing injuries they suffered nor confined to remediating violations that occurred during their
21 period of employment.
22 That PAGA does not limit a plaintiff to recover penalties only for the period of the
23 plaintiff’s employment is also consistent with the legislative history. According to Kim, PAGA’s
24 definition of “aggrieved employee” was meant to ensure “PAGA suits could not be brought by
25 ‘persons who suffered no harm from the alleged wrongful act.’” 9 Cal. 5th at 90. The Legislature
26 was concerned “PAGA would be vulnerable to the same abuses recently exposed under the Unfair
27 Competition Law,” as “California law previously authorized any person acting from the general
1 standing requirement” “by filing shakedown suits to extort money from small businesses for minor
2 or technical violations where no client had suffered an actual injury.” Id. (cleaned up). “It is
3 apparent that PAGA’s standing requirement was meant to be a departure from the ‘general public’
4 standing originally allowed under [California’s Unfair Competition Law].” Id. “[T]rue to
5 PAGA’s remedial purpose, the Legislature conferred fairly broad standing on all plaintiffs who
6 were employed by the violator and subjected to at least one alleged violation.” Id. at 91.
7 Consistent with this legislative history, Lawson is not just a member of the general public; he was
8 a Grubhub employee who suffered a Labor Code violation and thus has statutory standing.
9 Grubhub’s insistence that every court to have considered the issue has held a PAGA
10 plaintiff’s statutory standing is limited to recovering penalties during the plaintiff’s period of
11 employment is not persuasive. In Robinson, the court held “the preclusion of Robinson’s claims
12 for the period during which he was employed by Southern Counties deprives him of standing to
13 assert claims arising exclusively after he was so employed.” Robinson v. S. Ctys. Oil Co., 53 Cal.
14 App. 5th 476, 484 (2020). He was not an “aggrieved employee” because he “was not affected by
15 any of the alleged violations.” Id. (emphasis added). Here, in contrast, Lawson personally
16 sustained one or more Labor Code violations. (Dkt. No. 313 at 28-30, 34); see, e.g., Adolph, 532
17 P.3d at 695 (“An ‘aggrieved employee’ under PAGA is not merely a member of the general
18 public; an ‘aggrieved employee’ is an individual who worked for the alleged violator and
19 personally sustained at least one Labor Code violation.”).
20 In Shook, the plaintiffs were also not aggrieved employees under PAGA because the Safe
21 Harbor provision in § 226.2 extinguished the plaintiffs’ claims. Shook v. Indian River Transp.
22 Co., 236 F. Supp. 3d 1165, 1175 (E.D. Cal. 2017), aff’d, 716 F. App’x 589 (9th Cir. 2018) (“Nor
23 can plaintiffs recover on behalf of other employees for the post-Safe Harbor period. Shook’s and
24 Berringer’s claims were extinguished by their receipt of the Safe Harbor payments and they were
25 not employed after the Safe Harbor period. Thus, they are not ‘aggrieved employees’ under
26 PAGA, at least with respect to the post–Safe Harbor period.”). As in Robinson, the preclusion of
27 the plaintiffs’ claims for the period during which they were employed deprived them of standing
1 employee who suffered a minimum wage violation while employed. (Dkt. No. 313 at 28-30, 34.)
2 Gau is inapplicable for the same reason as Robinson and Shook: the Gau plaintiffs’
3 representative PAGA claims were precluded. Gau v. Hillstone Rest. Grp., Inc., No. 20-CV-
4 08250-SVK, 2022 WL 2833977, at *6 (N.D. Cal. July 20, 2022) (“Plaintiffs have offered no
5 sound policy reasons why the court-approved settlement in Klugh should not be given the claim
6 preclusive effect to which it is entitled. Accordingly, the Court concludes that Plaintiffs’ PAGA
7 claim in this case is barred under the doctrine of claim preclusion.”). Here, Lawson was not
8 precluded from litigating his PAGA claim.
9 In Nasiri, the plaintiff lacked representative PAGA standing to bring claims against an
10 employer for whom the plaintiff was never an employee. Nasiri v. T.A.G. Sec. Protective Servs.
11 Inc., No. 18-CV-01170-NC, 2021 WL 4221624, at *3 (N.D. Cal. Sept. 16, 2021), aff’d, No. 21-
12 16543, 2023 WL 4449197 (9th Cir. July 11, 2023) (“The issue in Nasiri’s case was not that his
13 claims were time-barred; it was that based on the timing of his dates of employment, he was not
14 shown to be an employee of T.A.G., Inc.”). While Grubhub points to a sentence in the decision in
15 which the court held the plaintiff also lacked standing to assert PAGA claims on behalf of other
16 employees who worked during a time period arising exclusively after his employment ended, the
17 trial judge’s bench trial ruling elucidates the court’s ruling was based on the plaintiff’s employer
18 (Murga) having incorporated a new entity (TAG) after the plaintiff’s employment ended. So, the
19 plaintiff did not have statutory standing to recover PAGA penalties for employees who worked for
20 a different employer. (Dkt. No. 336-1 at 11-12.) Here, Lawson seeks to recover PAGA penalties
21 for employees of his employer: Grubhub.
22 Put simply, these cases merely stand for the proposition a plaintiff lacks standing to pursue
23 PAGA penalties if the plaintiff is not an aggrieved employee. Lawson is an aggrieved employee.
24 Grubhub’s insistence that Lawson does not have statutory standing to recover PAGA penalties for
25 Labor Code violations to other employees beyond the period Lawson worked does not persuade.
26 Its motion for partial summary judgment on this score is DENIED.
27 II. Recovery of Penalties Prior to Dynamex
1 Grubhub in this case. Vazquez v. Jan-Pro Franchising Int’l, Inc., 10 Cal. 5th 944, 951 (2021);
2 Lawson, 13 F.4th at 914-16. Citing BMW v. Gore, 517 U.S. 559, 574 n.22 (1996), Grubhub still
3 argues it would violate due process to award PAGA penalties for Labor Code violations that
4 occurred before Dynamex was decided. In Gore, the Supreme Court observed: “The strict
5 constitutional safeguards afforded to criminal defendants are not applicable to civil cases, but the
6 basic protection against ‘judgments without notice’ afforded by the Due Process Clause, is
7 implicated by civil penalties.” Id. (cleaned up). Grubhub claims “it had no notice whatsoever that
8 the California Supreme Court would adopt and retroactively apply the ABC test” (Dkt. No. 335 at
9 14), and therefore it would violate due process to impose civil penalties—of any amount—against
10 Grubhub for misclassification of drivers prior to the decision.
11 In Vazquez v. Jan-Pro Franchising Int’l, Inc., 939 F.3d 1045 (9th Cir. 2019), certified
12 question answered, 10 Cal. 5th 944 (2021), the Ninth Circuit certified to the California Supreme
13 Court the question of whether Dynamex applies retroactively. See Dynamex Operations W. v.
14 Superior Ct., 4 Cal. 5th 903, 416 P.3d 1 (2018). The California Supreme Court answered
15 affirmatively, saying “under well-established jurisprudential principles, our interpretation of that
16 language in Dynamex applies retroactively to all cases not yet final that were governed by wage
17 orders containing that definition.” Vazquez v. Jan-Pro Franchising Int’l, Inc., 10 Cal. 5th 944,
18 951 (2021). In doing so, the Supreme Court specifically addressed and denied the petitioners’
19 argument it would be unfair to apply the ABC test retroactively because “employers were clearly
20 on notice well before the Dynamex decision that, for purposes of the obligations imposed by a
21 wage order, a worker’s status as an employee or independent contractor might well depend on the
22 suffer or permit to work prong of an applicable wage order — and that the law was not settled in
23 this area.” Vazquez, 10 Cal. 5th at 955; see, e.g., Ayala v. Antelope Valley Newspapers, Inc., 59
24 Cal. 4th 522, 531 (2014); Martinez v. Combs, 49 Cal. 4th 35, 57–58 (2010). “[I]ndeed, the ABC
25 test articulated in Dynamex was within the scope of what employers reasonably could have
26 foreseen.” Vazquez, 10 Cal. 5th at 955 (“We reject the contention that litigants must have
27 foresight of the exact rule that a court ultimately adopts in order for it to have retroactive effect.”);
1 found no reliance or fairness considerations weighing against the general rule that judicial
2 decisions apply retroactively, we likewise reject defendant’s related due process challenge to
3 retroactive application.”).
4 Grubhub cites no case that supports finding the imposition of civil penalties
5 unconstitutional in such circumstances, that is, when the law the defendant/employer claims is
6 new was within the scope of what employers reasonably could have foreseen. Vazquez, 10 Cal.
7 5th at 955; see also Frlekin v. Apple Inc., 8 Cal. 5th 1038, 1057 (2020) (cleaned up) (stating the
8 Supreme Court of California has “declined to restrict our decisions to prospective application
9 when doing so would, in effect, negate the civil penalties, if any, that the Legislature has
10 determined to be appropriate in this context, giving employers a free pass as regards their past
11 conduct and hence would exceed our appropriate judicial role.”); Valadez, 2019 WL 1975460, at
12 *5 (“Defendant’s argument that application of Dynamex to them would be unfair because it could
13 result in greater civil liability and penalties under PAGA is not as compelling as in cases where the
14 retroactive application of the decision would bar a party’s complaint altogether, as in Williams, 2
15 Cal. 5th at 1282, or subject the party to criminal contempt, as in Moss, 17 Cal. 4th at 419.” ).
16 Gore does not come close to compelling a finding of a due process violation. Bouie involved
17 criminal punishment. Bouie v. City of Columbia, 378 U.S. 347, 358 (1964) (“It is one thing to say
18 that a person remaining on another’s land after being told to leave may be ejected with reasonable
19 force or sued in a civil action, and quite another to say he may be convicted and punished as a
20 criminal. . . .for no man is punishable criminally for what was not criminal when done.” (cleaned
21 up)). So did Moss. Moss v. Superior Ct. (Ortiz), 17 Cal. 4th 396, 429 (1998) (“The effect would
22 be to make conduct that was not subject to criminal contempt sanctions at the time it was
23 committed contemptuous. This we may not do.”). Neither Bouie nor Moss persuade the Court a
24 due process violation exists here. Grubhub has not met its burden of showing the imposition of
25 any PAGA penalties for misclassification prior to the Dynamex decision would violate due
26 process.
27 //
1 CONCLUSION
2 Defendant’s motion for partial summary judgment is DENIED.
3
4 This Order disposes of Docket No. 335.
5 IT IS SO ORDERED.
6 || Dated: September 11, 2023
7
g ne
ACQUELINE SCOTT CORLE
9 United States District Judge
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