Lawson v. Grubhub, Inc.

1

2

3

4 UNITED STATES DISTRICT COURT

5 NORTHERN DISTRICT OF CALIFORNIA

6

7 RAEF LAWSON, Case No. 15-cv-05128-JSC

8 Plaintiff,

ORDER RE: PLAINTIFF’S

9 v. CONSTITUTIONAL STANDING TO

PURSUE PAGA PENALTIES AND THE

10 GRUBHUB, INC., et al., APPROPRIATE PAGA PERIOD

11 Defendants. Re: Dkt. No. 343

12

13 Raef Lawson brings a representative PAGA claim alleging Grubhub unlawfully classified

14 its food delivery drivers as independent contractors and as a result failed to reimburse them for

15 necessary expenses, pay them minimum wage, and pay them overtime wages. (Dkt. No. 41 ¶ 33.)1

16 Following oral argument on Grubhub’s motion for partial summary judgment, the Court ordered

17 the parties to submit supplemental briefing on 1) Lawson’s federal constitutional standing to

18 pursue PAGA penalties for his overtime and expense reimbursement claims in light of Magadia v.

19 Wal-Mart Assocs., Inc., 999 F.3d 668 (9th Cir. 2021), and 2) the temporal scope of the PAGA

20 period. (Dkt. No. 343.) Before the Court is the parties’ supplemental briefing. (Dkt. Nos. 346,

21 347, 348, 356, 357, 358, 362.)

22 Having carefully considered the briefing, and with the benefit of oral argument on January

23 31, 2024, the Court STAYS Lawson’s overtime and expense reimbursement claims pending

24 adjudication of the remaining minimum wage claim. Under binding Ninth Circuit law, Lawson

25 lacks Article III standing to pursue PAGA penalties for overtime and expense reimbursement

26 violations suffered by other employees since he did not personally suffer such violations. Based

27

1 on the current record, Lawson maintains Article III standing to pursue PAGA penalties for

2 minimum wage violations arising from time spent performing deliveries (whether on-block or off-

3 block) and time spent on-block. Lawson lacks Article III standing to pursue a PAGA claim

4 against Grubhub for minimum wage violations based on off-block time waiting for delivery

5 requests. The Court also believes Lawson lacks Article III standing to pursue penalties for

6 minimum wage violations, if any, that occurred after Proposition 22 took effect on December 16,

7 2020, but will give Lawson the opportunity to prove otherwise.

8 DISCUSSION

9 “[T]he irreducible constitutional minimum of standing contains three elements.” Lujan v.

10 Defs. Of Wildlife, 504 U.S. 555, 560 (1992). Lawson must show 1) he suffered an injury in fact

11 that is concrete, particularized, and actual or imminent; 2) the injury was likely caused by

12 Grubhub; and 3) the injury would likely be redressed by judicial relief. TransUnion LLC v.

13 Ramirez, 141 S. Ct. 2190, 2203 (2021). For an injury to be concrete, “it must actually exist.”

14 Spokeo, Inc. v. Robins, 578 U.S. 330, 340 (2016), as revised (May 24, 2016). Lawson bears the

15 burden of establishing constitutional standing and must maintain his personal interest in the

16 dispute at all stages of the litigation. TransUnion LLC, 141 S. Ct. at 2207-08.

17 Qui tam actions are a well-settled exception to the constitutional standing analysis.

18 Vermont Agency of Nat. Res. V. U.S. ex rel. Stevens, 529 U.S. 765, 773 (2000) (“adequate basis for

19 the relator’s suit for his bounty is to be found in the doctrine that the assignee of a claim has

20 standing to assert the injury in fact suffered by the assignor.”). This exception exists because “a

21 qui tam action is for a redress of the government’s injury, and it is the government’s injury that

22 confers standing upon the private person.” Magadia v. Wal-Mart Assocs., Inc., 999 F.3d 668, 674

23 (9th Cir. 2021) (cleaned up). So, a non-injured relator has constitutional standing to bring a qui

24 tam action when a statute effects a partial assignment of the government’s damages claim.

25 Vermont Agency of Nat. Res, 529 U.S. at 773.

26 In Magadia, the Ninth Circuit held PAGA does not qualify for the qui tam exception to

27 Article III’s standing requirement. 999 F.3d at 676-78. First, PAGA explicitly involves the

1 nonparty aggrieved employees. Id. at 676. Unlike traditional qui tam statutes, PAGA requires

2 25% of the recovered penalty be distributed amongst all employees aggrieved by the alleged Labor

3 Code violation and precludes California, the plaintiff employee, and all other nonparty aggrieved

4 employees from seeking additional penalties under the statute after judgment. Id. “PAGA

5 therefore creates an interest in penalties, not only for California and the plaintiff employee, but for

6 nonparty employees as well.” Id.

7 Second, “PAGA represents a permanent, full assignment of California’s interest to the

8 aggrieved employee,” which “prevents California from intervening in a suit brought by the

9 aggrieved employee, yet still binds the State to whatever judgment results.” Id. at 677. Whereas

10 in traditional qui tam actions “the government remains the real party in interest throughout the

11 litigation and may take complete control of the case,” id., California “has no authority under

12 PAGA to intervene in a case brought by an aggrieved employee.” Id. “PAGA thus lacks the

13 procedural controls necessary to ensure that California—not the aggrieved employee (the named

14 party in PAGA suits)—retains substantial authority over the case.” Id. (cleaned up).

15 Because of PAGA’s two significant departures from a traditional qui tam action, the Ninth

16 Circuit held the qui tam exception to Article III standing did not apply. So, the Magadia plaintiff

17 lacked constitutional standing to bring PAGA claims alleging violations for which he himself did

18 not suffer injury. Id. at 678.

19 A. Lawson’s Constitutional Standing for Overtime/Expense Claims

20 The Court found Lawson did not personally suffer any overtime or expense reimbursement

21 violation. (Dkt. Nos. 313 at 28, 33-34; 292 at 5.) Under Magadia, he therefore lacks Article III

22 standing to pursue PAGA penalties for overtime and expense reimbursement violations other

23 employees suffered. 999 F.3d at 677-78. But Lawson claims Magadia is no longer good law in

24 light of Viking River Cruises, Inc. v. Moriana, 596 U.S. 639, reh’g denied, 143 S. Ct. 60 (2022),

25 and Turrieta v. Lyft, Inc., 69 Cal. App. 5th 955 (2021).

26 1. Viking River Cruises

27 This Court is bound by Magadia unless Viking River Cruises “has undercut the theory or

1 335 F.3d 889, 900 (9th Cir. 2003) (en banc). If they are, then “district courts should consider

2 themselves bound by the intervening higher authority and reject the prior opinion of [the Ninth

3 Circuit] as having been effectively overruled.” Gonzalez v. Arizona, 677 F.3d 383, 390 (9th Cir.

4 2012), aff’d sub nom. Arizona v. Inter Tribal Council of Arizona, Inc., 570 U.S. 1 (2013).

5 Lawson argues Viking River fatally undermined one of Magadia’s two grounds for

6 distinguishing PAGA from a traditional qui tam action; namely, Magadia’s holding that PAGA

7 involves a “permanent, full assignment of California’s interest to the aggrieved employee,” which

8 “prevents California from intervening in a suit brought by the aggrieved employee, yet still binds

9 the State to whatever judgment results.” 999 F.3d at 677. In Viking River, the Supreme Court

10 observed, “California precedent holds that a PAGA suit is a representative action in which the

11 employee plaintiff sues as an agent or proxy of the state.” 596 U.S. at 645 (cleaned up). “As the

12 California courts conceive of it, the State is always the real party in interest in the suit.” Id.

13 (cleaned up). In a footnote to this statement, the Court recognized “[t]he extent to which PAGA

14 plaintiffs truly act as agents of the State rather than complete assignees is disputed,” citing

15 Magadia. Id. at 646 n.2. The Court further mused:

16 Agency requires control. But apart from the exhaustion process, the

statute does not feature any explicit control mechanisms, such as

17 provisions authorizing the State to intervene or requiring its approval

of settlements.

18

That said, California precedent strongly suggests that the State retains

19 inherent authority to manage PAGA actions. There is no other

obvious way to understand California precedent’s description of the

20 State as the “real party in interest.” And a theory of total assignment

appears inconsistent with the fact that employees have no assignable

21 interest in a PAGA claim. For purposes of this opinion, we assume

that PAGA plaintiffs are agents.

22

Id.

23

Magadia’s reasoning is not clearly irreconcilable with Viking River. First, Viking River is

24

silent on Magadia’s first distinction: PAGA explicitly implicates the interests of others beside the

25

plaintiff and the state. 999 F.3d at 676-77. Second, Viking River’s discussion of the extent of

26

PAGA’s assignment of the government’s interest was cabined to statutory standing under PAGA,

27

noted PAGA “does not feature any explicit control mechanisms” enabling State intervention, and

1 assumed without deciding PAGA plaintiffs are agents. 596 U.S. at 646 n.2. Viking River never

2 addressed constitutional standing because the case arose from a California state court and Article

3 III standing was not at issue. “It is not enough for there to be some tension between the

4 intervening higher authority and prior circuit precedent, or for the intervening higher authority to

5 cast doubt on the prior circuit precedent.” Lair v. Bullock, 697 F.3d 1200, 1207 (9th Cir. 2012).

6 Because Viking River left unexamined whether PAGA plaintiffs are state agents for the purposes

7 of constitutional standing, Viking River does not overrule Magadia’s holding a PAGA plaintiff

8 lacks constitutional standing to seek civil penalties for injuries he did not personally suffer.

9 2. Turrieta

10 Next, Lawson insists Magadia’s standing ruling is no longer good law in light of the

11 California Court of Appeals decision in Turrieta. The Ninth Circuit’s interpretation of California

12 law “is only binding in the absence of any subsequent indication from the California courts that

13 our interpretation was incorrect.” Owen By & Through Owen v. United States, 713 F.2d 1461,

14 1464 (9th Cir. 1983). “In the absence of a pronouncement by the highest court of a state, the

15 federal courts must follow the decision of the intermediate appellate courts of the state unless there

16 is convincing evidence that the highest court of the state would decide differently.” Id. (cleaned

17 up).

18 In Turrieta, a plaintiff brought and settled a PAGA action alleging Lyft misclassified its

19 drivers as independent contractors. Drivers for whom PAGA penalties were recovered objected to

20 the settlement. Turrieta held the drivers lacked statutory standing to challenge the settlement.

21 Quoting the California Supreme Court’s decisions in Kim and Iskanian, the California appellate

22 court held “[a] PAGA representative action is therefore a type of qui tam action, and the

23 government entity on whose behalf the plaintiff files suit is always the real party in interest.” 69

24 Cal. App. 5th at 971-72 (cleaned up). Consequently, a plaintiff’s “ability to file PAGA claims on

25 behalf of the state does not convert the state’s interest into their own or render them real parties in

26 interest.” Id. at 972. The court held nonparty employees had no pecuniary interest in the penalties

27 at issue because “civil penalties recovered on the state’s behalf are intended to remediate present

1 Int’l California, Inc., 9 Cal. 5th 73, 86 (2020)).

2 Turrieta does not render incorrect Magadia’s holding a PAGA plaintiff must have Article

3 III standing. “[S]tanding in federal court is a question of federal law, not state law.”

4 Hollingsworth v. Perry, 570 U.S. 693, 715 (2013). As a matter of federal law, Magadia held

5 PAGA does not qualify for the federally-recognized exception to the Article III standing

6 requirement because PAGA fails to satisfy two traditional qui tam criteria. 999 F.3d at 675-78.

7 First, PAGA implicates the interests of all employees by requiring a portion of the PAGA penalty

8 to go to all affected employees, not just the state and the PAGA plaintiff, and because a PAGA

9 judgment binds the nonparty employees from seeking additional penalties for the same violations.

10 Id. at 676-77. And second, PAGA lacks the procedural controls necessary to ensure California

11 retains substantial authority over PAGA actions. Id. at 677-78.

12 Turrieta’s holding the objecting drivers were not real-parties-in-interest sufficient to give

13 them standing under California law to challenge the PAGA judgment is not inconsistent with

14 Magadia’s description of PAGA. As Magadia held, PAGA, in fact, authorizes payment of a

15 portion of the penalties to nonparties. Cal. Lab. Code §2699(i). Turrieta in no way renders

16 incorrect Magadia’s conclusion that “none of the other modern qui tam statutes mentioned in

17 Vermont Agency authorize suits on behalf of non-parties or involve payments to non-parties.” 999

18 F.3d at 677 n.5. And Turrieta does not contradict Magadia’s observation California lacks the

19 authority to intervene in PAGA suits and therefore does not retain “substantial authority” over

20 PAGA actions. Id. at 677; see also Viking River, 596 U.S. at 646 n.2 (“the statute does not feature

21 any explicit control mechanisms, such as provisions authorizing the State to intervene or requiring

22 its approval of settlements”). Magadia concluded: “PAGA prevents California from intervening

23 in a suit brought by the aggrieved employee, yet still binds the State to whatever judgment

24 results,” and this procedural feature is “an anomaly among modern qui tam statutes.” 999 F.3d at

25 677. Nothing in Turrieta suggests California can intervene. So, Turrieta does not change

26 Magadia’s standing analysis. “After all, States have no power directly to enlarge or contract

27 federal jurisdiction.” Id. at 674.

1 the Labor and Workforce Development Agency’s motion to intervene in a PAGA action on the

2 grounds “the State of California is the real party in interest in a PAGA suit. Therefore, the [Labor

3 and Workforce Development Agency] has a right to intervene.” Civ. Act. No. 19STCV28802

4 (cleaned up). So, Lawson argues, Magadia was incorrect when it said the State cannot intervene

5 in a PAGA action. But a California superior court cannot render a Ninth Circuit decision

6 incorrect. Owen, 713 F.2d at 1464 (“In the absence of a pronouncement by the highest court of a

7 state, the federal courts must follow the decision of the intermediate appellate courts of the state”).

8 Moreover, since Article III standing is a question of federal constitutional law, it is not clear this

9 Court could refuse to follow Magadia because of any subsequent state court decision.

10 * * *

11 Magadia remains binding authority. Accordingly, Lawson lacks constitutional standing to

12 pursue PAGA penalties for the alleged overtime and expense reimbursement violations suffered

13 by other employees since he did not personally suffer those kinds of violations. Magadia, 999

14 F.3d at 678.

15 B. Lawson’s Constitutional Standing After April 2017

16 The Court found Lawson personally suffered minimum wage violations. (Dkt. No. 313 at

17 28-33.) So, Lawson has constitutional standing to bring a PAGA claim alleging minimum wage

18 violations against Grubhub. Magadia, 999 F.3d at 678. But Grubhub insists Lawson lacks

19 constitutional standing to pursue PAGA penalties for minimum wage violations that occurred

20 beyond April 2017 because Grubhub changed its policies after April 2017. Grubhub identifies

21 two changes in particular: 1) as of May 2016, Grubhub no longer required delivery drivers to sign

22 up for scheduled shifts to receive delivery requests and 2) in April 2017, delivery drivers ignored

23 or declined nearly 50% of delivery requests.

24 Grubhub concedes its identified policy changes have no impact on the Court’s analysis of

25 the business-to-business exemption or application of the ABC test. (Dkt. No. 358 at 5 (“But that

26 is beside the point.”).) Grubhub thus does not challenge the conclusion Grubhub’s drivers

27 remained employees after April 2017. Instead, Grubhub argues its policy changes so impact the

1 recover penalties for minimum wage violations that occurred after April 2017.

2 1. Off-Block Deliveries

3 Grubhub first contends Lawson’s “individual use of the platform is not representative of

4 the drastically different experiences of other” delivery drivers who used Grubhub’s platform after

5 April 2017 because Grubhub began encouraging off-block deliveries in May 2016 and over 50%

6 of deliveries were performed off-block in April 2017. (Dkt. No. 348 at 5, 11.) But delivery

7 drivers could and did perform off-block deliveries during Lawson’s employment at Grubhub.

8 (Dkt. Nos. 104-16 at 5, 7; 348-1 ¶¶ 6-7.) While Lawson was employed at Grubhub, delivery

9 drivers could receive delivery requests without signing up for scheduled shifts. (Id.) So,

10 Grubhub’s May 2016 policy does not mark such a significant change in work circumstances as to

11 extinguish Lawson’s constitutional standing to pursue penalties for minimum wage violations after

12 April 2017.

13 However, Lawson lacks constitutional standing to pursue PAGA penalties on behalf of off-

14 block delivery drivers who suffered minimum wage violations while waiting for delivery requests.

15 Magadia, 999 F.3d at 678. Lawson only worked on-block. (Dkt. Nos. 112-4 at 12 n.9; Dkt. No.

16 217 at 23 ¶ 55 (“[Lawson] never worked when he was not signed up for a shift.”).) Lawson thus

17 lacks any personal stake in adjudicating, for instance, whether off-block time spent waiting to

18 receive a delivery request is compensable because the determination of this issue “has no impact

19 on [Lawson’s] individual claims.” Shwiyhat v. Martin Marietta Materials, Inc., No. 3:23-CV-

20 00283-JSC, 2023 WL 6626129, at *8 (N.D. Cal. Oct. 10, 2023). To put it another way, to impose

21 PAGA penalties for minimum wage violations that occurred based on off-block time spent waiting

22 to receive a delivery request, the Court will have to receive evidence and make a finding as to

23 whether such time is compensable. But Lawson personally has no experience working off-block.

24 So, he has no Article III standing to argue off-block time spent waiting for delivery requests is

25 compensable and thus lacks constitutional standing to pursue a PAGA claim against Grubhub for

26 minimum wage violations based on off-block time spent waiting for delivery requests. Magadia,

27 999 F.3d at 678. In any event, at oral argument Lawson stated that in this Court he is not seeking

1 requests.

2 Otherwise, the Court’s compensability analysis remains intact despite the increased

3 prevalence of off-block deliveries after April 2017. Time spent performing deliveries is

4 compensable whether on-block or off-block. (Dkt. No. 313 at 22.) Time spent on-block, toggled

5 available, and in-network is compensable and thus figures into the minimum wage analysis. (Id.

6 at 22-27.)

7 2. Declination of Delivery Requests

8 Grubhub also insists Lawson lacks constitutional standing to pursue PAGA penalties after

9 April 2017 because delivery drivers ignored or declined 50% of delivery requests in April 2017.2

10 The policy change allowing drivers to ignore or reject orders occurred during Lawson’s

11 employment at Grubhub. (Dkt. No. 313 at 20.) Prior to December 2015, Grubhub instructed

12 Lawson not to reject or be unavailable to receive incoming orders. (Id. at 23-24.) On December

13 5, 2015, Grubhub no longer required drivers not to reject and receive incoming orders during any

14 scheduled delivery block. (Id. at 20.) Notwithstanding the December 2015 policy change,

15 Grubhub expressly terminated Lawson because he was not available to and did not accept delivery

16 offers during his self-scheduled blocks. (Id. at 24.) On this basis, the Court found the requirement

17 not to reject or be unavailable to receive delivery requests “remained a practical feature of his

18 employment.” (Id.)

19 Grubhub now claims this requirement is no longer a practical feature of Grubhub

20 employment, as 50% of delivery requests were ignored or declined in April 2017. But Grubhub’s

21 evidence does not prove on-block delivery drivers were able to ignore or decline delivery requests

22 after April 2017, and thus fails to show the practical requirement not to reject and receive

23 incoming orders changed for on-block delivery drivers after April 2017. As Lawson points out,

24

25

2 Grubhub contends the rate at which delivery drivers ignored or declined requests was “nearly

50% in April 2017, confirming that such drivers were not subject to Grubhub’s control when

26

logged onto the platform.” (Dkt. No. 348 at 5.) Grubhub claims the rate remained above this

threshold in the following months, but the declaration to which Grubhub cites merely says the

27

trend “continued in the ensuing months.” (Dkt. No. 348-1 ¶ 7.) Grubhub does not say the rate of

1 “the increase in rejected or ignored orders may very well have pertained to the increased number

2 of drivers working off-block.” (Dkt. No. 357 at 18.) This is because on-block and off-block

3 drivers face different incentives in deciding whether to ignore or decline delivery requests.

4 Grubhub benefits from using the block scheduling system to monitor driver supply and meet

5 anticipated demand. (Dkt. No. 313 at 24.) Grubhub incentivizes drivers to sign up for and work

6 during scheduled blocks with “true up” pay, which off-block drivers are unable to receive. (Dkt.

7 No. 313 at 6.) True up pay is a minimum hourly guarantee only available for on-block drivers

8 who accept a certain percentage of orders during their scheduled block. (Id.) Until December

9 2015, Lawson had to accept 75% of orders during his scheduled block to receive $15 per hour;

10 after December 2015, Lawson had to accept 85% of orders during his scheduled block to receive

11 $11 per hour. (Id.) So, an on-block delivery driver who ignores or declines orders jeopardizes

12 their minimum hourly guarantee, whereas off-block delivery drivers face no such risk of lost pay

13 for ignoring or declining orders.

14 Given the different incentives, the Court is unable to infer the practical requirement not to

15 reject or be unavailable to receive orders no longer exists for on-block delivery drivers after April

16 2017 based on the percentage of ignored or declined orders in April 2017. So, Grubhub fails to

17 demonstrate the practical requirement not to reject and receive incoming orders changed for on-

18 block delivery drivers after April 2017. Lawson’s constitutional standing to pursue PAGA

19 penalties and the Court’s compensability analysis are thus unaffected by the rate of orders ignored

20 or rejected in April 2017. As the Court stated at oral argument, this standing analysis may change

21 as the record develops. But on the present record, Lawson has standing.

22 * * *

23 Neither of the policy changes Grubhub identifies extinguish Lawson’s constitutional

24 standing to pursue PAGA penalties for minimum wage violations arising from time spent

25 performing deliveries (whether on-block or off-block) and time spent on-block. However, Lawson

26 lacks constitutional standing to pursue a PAGA claim against Grubhub for minimum wage

27 violations based on off-block time spent waiting for delivery requests.

1 C. Discretion to Limit PAGA Penalties

2 Although PAGA “penalties are mandatory, not discretionary, a court may award a lesser

3 amount than the maximum civil penalty based on the facts and circumstances of the particular

4 case.” Brown v. Wal-Mart Stores, Inc., 651 F. App’x 672, 674 (9th Cir. 2016) (cleaned up); Cal.

5 Labor Code § 2699(e)(2). The court may reduce penalties only when “to do otherwise would

6 result in an award that is unjust, arbitrary and oppressive, or confiscatory.” Amaral v. Cintas

7 Corp. No. 2, 163 Cal. App. 4th 1157, 1213 (2008) (“[A] court can only exercise its discretion to

8 award lesser penalties based on the enumerated considerations.”); Cal. Labor Code § 2699(e)(2).

9 Grubhub requests the Court exercise its discretion to limit the PAGA period through April 2017

10 “in light of Grubhub’s good-faith compliance with the governing law at the time Lawson used the

11 platform.” (Dkt. No. 348 at 13.)

12 In February 2018, the Court found Lawson was properly classified as an independent

13 contractor for Grubhub after applying the then-applicable Borello test. (Dkt. No. 221 at 30-33.)

14 In April 2018, the California Supreme Court decided the ABC test—not the Borello test—

15 determines whether a worker is properly classified as an independent contractor under the suffer-

16 or-permit-to-work standard. Dynamex Operations W. v. Superior Ct., 4 Cal. 5th 903, 916 (2018).

17 In Dynamex, the California Supreme Court acknowledged the significant disadvantages of the

18 Borello standard, namely the

19 multifactor, all the circumstances standard affords a hiring business

greater opportunity to evade its fundamental responsibilities

20 under a wage and hour law by dividing its workforce into disparate

categories and varying the working conditions of individual workers

21 within such categories with an eye to the many circumstances that

may be relevant under the multifactor standard.

22

23 Id. at 955 (emphasis added). Well before Dynamex, Grubhub was on notice “that, for the purposes

24 of the obligations imposed by a wage order, a worker’s status as an employee or independent

25 contractor might well depend on the suffer or permit to work prong of an applicable wage order—

26 and that the law was not settled in this area.” Vazquez v. Jan-Pro Franchising Int’l, Inc., 10 Cal.

27 5th 944, 955 (2021). “[I]ndeed, the ABC test articulated in Dynamex was within the scope of

1 have foreseen the ABC test would apply, but did not comply with the ABC standard. These

2 circumstances undermine Grubhub’s claim of good-faith compliance. The Court is unpersuaded

3 Grubhub is entitled to a reduced penalty for its compliance with the “manipulable” Borello

4 standard, which the California Supreme Court has since recognized “invites employers to structure

5 their relationships with employees in whatever manner best evades liability.” Dynamex, 4 Cal. 5th

6 at 916.

7 In any event, Grubhub fails to explain why its Borello compliance warrants limiting the

8 penalty period to April 2017. Given the two policy changes Grubhub identifies to contend work

9 circumstances at Grubhub were “drastically different” after April 2017 actually occurred during

10 Lawson’s employment at Grubhub, (Dkt. No. 348 at 5), it would be arbitrary to limit the PAGA

11 penalty period to April 2017 solely based on Grubhub’s Borello compliance. Grubhub thus fails

12 to show the penalty period should be limited through April 2017 to avoid an unjust, arbitrary and

13 oppressive, or confiscatory result.

14 Grubhub also requests the Court limit the PAGA period through April 2017 based on

15 Lawson’s “minimal damages.” (Dkt. No. 358 at 7.) Lawson is personally owed $65.11 in

16 damages for Grubhub’s minimum wage violations. (Dkt. No. 313 at 34.) But Lawson’s personal

17 damages are not necessarily indicative of the gravity of Grubhub’s violations because “[p]roperly

18 understood, Lawson’s PAGA claim is an action between California and Grubhub.” (Dkt. No. 344

19 at 5.); see Arias v. Superior Ct., 46 Cal. 4th 969, 986 (2009) (“In a lawsuit brought under the act,

20 the employee plaintiff represents the same legal right and interest as state labor law enforcement

21 agencies—namely, recovery of civil penalties that otherwise would have been assessed and

22 collected by the Labor Workforce Development Agency.”) Though Lawson’s damages only

23 amount to $65.11,

24 both the federal and state governments have declared that the

misclassification of workers as independent contractors rather than

25 employees is a very serious problem, depriving federal and state

governments of billions of dollars in tax revenue and millions of

26 workers of the labor law protections to which they are entitled.

27 Dynamex, 4 Cal. 5th at 913 (emphasis added). That Lawson’s personal damages were minimal

1 Grubhub’s reference to Carrington v. Starbucks Corp., 30 Cal. App. 5th 504 (2018), fails

2 to persuade that the Court should not award any PAGA penalties for minimum wage violations

3 that occurred after April 2017. Carrington involved reducing the amount of penalty for each

4 violation, not limiting the PAGA penalty period. And, at this point, it is premature for the Court

5 to determine the amount of penalty for each (currently unknown) violation.

6 * * *

7 Grubhub fails to persuade the Court its Borello compliance and Lawson’s personal

8 damages warrant limitation of the PAGA penalty period through April 2017 because Grubhub

9 fails to show “to do otherwise would result in an award that is unjust, arbitrary and oppressive, or

10 confiscatory.” Amaral, 163 Cal. App. 4th at 1213; Cal. Labor Code § 2699(e)(2).

11 D. Inherent Authority to Limit the PAGA Period

12 District courts possess “inherent powers that are “governed not by rule or statute but by the

13 control necessarily vested in courts to manage their own affairs so as to achieve the orderly and

14 expeditious disposition of cases.” Dietz v. Bouldin, 579 U.S. 40, 45 (2016) (cleaned up). The

15 Court’s exercise of its inherent power 1) “must be a reasonable response to the problems and

16 needs confronting the court’s fair administration of justice” and 2) must not “be contrary to any

17 express grant of or limitation on the district court’s power contained in a rule or statute.” Id. at 45-

18 46 (cleaned up). Though trial courts lack inherent authority to dismiss or strike a PAGA claim on

19 manageability grounds, trial courts may “limit[] the types of evidence a plaintiff may present or

20 us[e] other tools to assure that a PAGA claim can be effectively tried.” Estrada v. Royalty Carpet

21 Mills, Inc., No. S274340, 2024 WL 188863, at *18 (Cal. Jan. 18, 2024); see also Woodworth v.

22 Loma Linda Univ. Med. Ctr., 93 Cal. App. 5th 1038, 1047 (2023), reh’g denied (Aug. 17, 2023)

23 (“When faced with unwieldy PAGA claims, trial courts may limit the scope of the claims or the

24 evidence to be presented at trial but may not prohibit PAGA plaintiffs from presenting their claims

25 entirely.”).

26 Grubhub requests the Court exercise its inherent authority to limit the PAGA penalty

27 period through April 2017. Grubhub claims limiting the temporal scope of PAGA penalties is

1 nature, is an arduous and protracted fact-finding process. As the Court has already explained:

2 The facts overlap a lot: Grubhub’s policies, business model, and

operations will be as integral to the remaining claims as to Mr.

3 Lawson’s. The main differences are each worker’s hours, pay,

potential operation of her own bona fide delivery business, and how

4 she spent her “on-block” time. But even those differences go to core

areas of overlap: whether a worker is an employee under the ABC

5 test, whether the business-to-business exemption applies, and whether

certain on-block time is compensable work time.

6

7 (Dkt. No. 324 at 4.) Grubhub complains new compensability analyses will be required for the

8 time period after April 2017 to account for off-block deliveries. Not so. Because Lawson lacks

9 constitutional standing to pursue a PAGA claim alleging minimum wage violations for off-block

10 time spent waiting to receive delivery requests, the Court’s compensability analysis is not

11 disrupted by the “ever-increasing number of hours worked outside of blocks.” (Dkt. No. 348 at

12 15.) So, the Court is unpersuaded limiting the PAGA penalty period through April 2017

13 reasonably advances the fair administration of justice.

14 However, the Court believes Lawson lacks Article III standing to pursue PAGA penalties

15 for minimum wage violations, if any, that occurred after December 16, 2020, the day Proposition

16 22 took effect. Proposition 22 provides that, if certain conditions are met, app-based drivers are

17 independent contractors. Cal. Bus. & Prof. § 7451. So, after December 16, 2020, the criteria for

18 classifying app-based drivers changed. This Court has not adjudicated whether any post-

19 Proposition 22 Grubhub driver was misclassified. Lawson lacks Article III standing to argue

20 Grubhub drivers are employees under Proposition 22’s scheme because he did not drive for

21 Grubhub after the law changed; he has no personal stake in the outcome of that question.

22 TransUnion LLC, 141 S. Ct at 2203; see also Raines v. Byrd, 521 U.S. 811, 819 (1997) (“We have

23 consistently stressed that a plaintiff’s complaint must establish that he has a ‘personal stake’ in the

24 alleged dispute, and that the alleged injury suffered is particularized as to him.”).

25 Even aside from standing, December 16, 2020 is a reasonable bookend to Lawson’s PAGA

26 penalty period because the Court can employ a consistent analysis to classify app-based drivers

27 from December 13, 2014, to December 16, 2020, for the purposes of Lawson’s minimum wage

1 of Grubhub’s compliance with Proposition 22 and thus a whole new misclassification trial. (Dkt.

2 Nos. 348 at 6 n.1, 357 at 10 n.4.) By limiting the PAGA period through December 16, 2020, the

3 Court avoids this issue altogether without contradicting any express rule or statute. Dietz, 579

4 U.S. at 46. The effective date of Proposition 22 marks a change in work circumstances. This is an

5 appropriate and administrable limit on the evidence Lawson may introduce at trial to prove the

6 alleged minimum wage violations suffered by other aggrieved employees. Estrada, 2024 WL

7 188863 at *18.

8 Lawson, who was not employed by Grubhub when Proposition 22 took effect, has not yet

9 had the opportunity to address his constitutional standing after Proposition 22’s effective date or to

10 otherwise explain why the Court should hold another misclassification trial. So, on or before

11 February 21, 2024, Lawson may file a brief addressing these issues. Grubhub may respond on or

12 before March 6, 2024. If Lawson does not file a brief, the Court’s order ending the PAGA penalty

13 period on Proposition 22’s effective date will remain.

14 CONCLUSION

15 Because Lawson lacks Article III standing for the alleged overtime and expense

16 reimbursement claims, as well as any minimum wage claim for violations that occurred after

17 Proposition 22 went into effect, the Court STAYS these claims pending final adjudication of

18 Lawson’s remaining minimum wage PAGA claim. See Ornelas v. Tapestry, Inc., No. C 18-06453

19 WHA, 2021 WL 2778538, at *11 (N.D. Cal. July 2, 2021) (staying PAGA claim for which the

20 plaintiff lacked Article III standing until adjudication of remaining claims).

21 Lawson maintains Article III standing to pursue PAGA penalties for minimum wage

22 violations arising from time spent performing deliveries (whether on-block or off-block) and time

23 spent on-block. Lawson lacks Article III standing to pursue a PAGA claim against Grubhub for

24 minimum wage violations based on off-block time spent waiting for delivery requests and

25 minimum wage violations that occurred after December 16, 2020, the day Proposition 22 took

26 effect. So, the period for which Lawson may seek to recover PAGA penalties is December 3,

27 2014, through December 16, 2020, the day Proposition 22 took effect, subject to modification

1 On or before February 21, 2024, Lawson shall file a brief addressing his constitutional

2 standing to pursue PAGA penalties for minimum wage violations after Proposition 22 took effect.

3 Grubhub may respond on or before March 6, 2024. A further Case Management Conference will

4 || be held on March 21, 2024 at 1:30 p.m. via Zoom video. An updated Joint Case Management

5 Conference Statement is due March 14, 2024. Any discovery dispute joint letters shall be filed by

6 || March 14, 2024.

7 This Order disposes of Docket No. 343.

8 IT IS SO ORDERED.

9 || Dated: February 1, 2024

10 ,

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11

‘ACQUELINE SCOTT CORLEY'

12 United States District Judge

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