Amicus Curiae Brief — Mobilize the Message, LLC, et al., Petitioners v. Rob Bonta, Attorney General of California
Supreme Court briefApr 10, 2023
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No. 22-865
IN THE
Supreme Court of the United States
MOBILIZE THE MESSAGE, LLC, et al.,
Petitioners,
v.
ROB BONTA, ATTORNEY
GENERAL OF CALIFORNIA,
Respondent.
On Petition for a Writ of Certiorari to the United
States Court of Appeals for the Ninth Circuit
___________
BRIEF OF THE INDEPENDENT INSTITUTE,
NATIONAL FEDERATION OF
INDEPENDENT BUSINESS SMALL
BUSINESS LEGAL CENTER, INC., AND NEW
JOBS AMERICA AS AMICI CURIAE
SUPPORTING PETITIONERS
Elizabeth Milito
Rob Smith
NFIB SMALL BUSINESS
LEGAL CENTER
555 12th Street, NW
Ste. 1001
Washington, DC 20004
APRIL 10, 2023
Krystal B. Swendsboe
Counsel of Record
Thomas M. Johnson, Jr.
William Turner
WILEY REIN LLP
2050 M Street, N.W.
Washington, D.C. 20036
202.719.7000
kswendsboe@wiley.law
TABLE OF CONTENTS
INTEREST OF THE AMICI CURIAE ....................1
SUMMARY OF ARGUMENT ..................................3
ARGUMENT ............................................................5
I. This Court Should Grant Certiorari Because the
Ninth Circuit’s Decision Disregards This Court’s
Precedent and Deepens a Circuit Split. ..................9
A. The Ninth Circuit’s Decision Rewrites This
Court’s Precedent From Below. ...........................11
B. The Circuits Are Split On How To Apply the
Reed Function-or-Purpose Test. ..........................16
II. This Case Presents an Issue Of Exceptional
Importance Meriting Review Because AB5
Substantially Burdens the Speech Of Independent
Contractors and Harms Employers, Workers, and
the Public. ...............................................................17
A. Recategorizing Independent Contractors As
Employees Impermissibly Burdens Political
Speech. ..................................................................17
B. AB5 Harms Independent Contractors. ...........23
CONCLUSION .......................................................29
ii
TABLE OF AUTHORITIES
Page(s)
Cases
Aptive Env’t, LLC v. Town of Castle Rock,
959 F.3d 961 (10th Cir. 2020) .............................. 16
Bank Markazi v. Peterson,
578 U.S. 212 (2016) .............................................. 11
Barr v. Am. Ass’n of Pol. Consultants, Inc.,
140 S. Ct. 2335 (2020) .................. 11, 13–14, 16, 19
Cahaly v. Larosa,
796 F.3d 399 (4th Cir. 2015) ................................ 16
Citizens United v. Fed. Election Comm’n,
558 U.S. 310 (2010) .............................................. 14
City of Austin v. Reagan Nat’l Advert. of Austin,
LLC, 142 S. Ct. 1464 (2022) ........................... 11, 15
D.C. v. Heller,
554 U.S. 570 (2008) .............................................. 22
Greene v. McElroy,
360 U.S. 474 (1959) .............................................. 23
iii
Harbourside Place, LLC v. Town of Jupiter,
958 F.3d 1308 (11th Cir. 2020) ............................ 17
March v. Mills,
867 F.3d 46 (1st Cir. 2017) .................................. 17
Nat’l Inst. of Fam. & Life Advocs. v. Becerra,
138 S. Ct. 2361 (2018) .......................................... 15
Olson v. California,
62 F.4th 1206 (9th Cir. 2023) .......................... 6, 15
Police Dep’t of City of Chicago v. Mosley,
408 U.S. 92 (1972) .................................................. 9
Reed v. Town of Gilbert,
576 U.S. 155 (2015) .......................... 4, 9–12, 16, 18
Sorrell v. IMS Health Inc.,
564 U.S. 552 (2011) ........................................ 11, 12
Statutes
Cal. Lab. Code § 2775(b)(1) ......................................... 5
iv
Other Authorities
Katherine G. Abraham, et al., The Independent
Contractor Workforce: New Evidence On Its Size
and Composition and Ways to Improve Its
Measurement in Household Surveys, Nat’l Bureau
Econ. Research, Working Paper 30997 (Mar.
2023), https://www.nber.org/papers/w30997 ......... 7
Karen Anderson, As with California’s disastrous AB
5 law, the PRO Act would hurt major sectors of the
independent workforce, Americans for Prosperity
(June 4, 2021),
https://americansforprosperity.org/ab5-pro-acthurting-workforce/ ............................................... 22
Lorenzo E. Bernal-Verdugo et al., Labor Market
Flexibility and Unemployment: New Empirical
Evidence of Static and Dynamic Effects, Int'l
Monetary Fund, Working Paper No. 2012/064
(2012),
https://www.imf.org/en/Publications/WP/Issues/20
16/12/31/Labor-Market-Flexibility-andUnemployment-New-Empirical-Evidence-ofStatic-and-Dynamic-25753 .................................. 21
v
Annette Bernhardt, et al., Independent Contracting
in California: An Analysis of Trends and
Characteristics Using Tax Data, UC Berkeley
Labor Center (Mar. 1, 2022),
https://laborcenter.berkeley.edu/independentcontracting-in-california/#s-2................................. 6
Juan Botero et al., The Regulation of Labor, 119 Q. J.
Econ. 1339 (2004),
https://academic.oup.com/qje/articleabstract/119/4/1339/1851075?redirectedFrom=full
text ........................................................................ 21
The 2020-21 Budget Staffing to Address New
Independent Contractor Test, Cal. Legis. Analyst’s
Off. (Feb. 11, 2020),
https://lao.ca.gov/Publications/Report/4151 ........ 22
Assembly Floor Analysis, Cal. Legis. Info. (Sept. 10,
2019),
https://leginfo.legislature.ca.gov/faces/billAnalysis
Client.xhtml?bill_id=201920200AB5 .................... 6
M. Keith Chen et al., The Value of Flexible Work:
Evidence from Uber Drivers, 127 J. Pol. Econ.
2735 (2019) ........................................................... 27
vi
Coalition for Workforce Innovation, National Study
of 600 Self-Identified Independent Contractors
(Jan. 2020),
https://rilastagemedia.blob.core.windows.net/rilaweb/rila.web/media/media/pdfs/letters%20to%20hi
ll/hr/cwi-report-final.pdf ................................ 25, 26
Direct Selling Ass’n, 2020 Consumer Attitudes &
Entrepreneurship Study (2020),
https://www.dsa.org/docs/defaultsource/research/dsa-ipsos-2020consumerattitudesinfographic227.pdf?sfvrsn=68ddfa5_2 ..................................... 25
Edelmen Data & Intelligence, Freelance Forward
2022, Upwork (2022),
https://www.upwork.com/research/freelanceforward-2022 .................................................... 7, 24
Independent Contractor Status Under the Fair Labor
Standards Act, 86 Fed. Reg. 1168, 1219 (Jan. 7,
2021) ..................................................................... 27
Best States for Business 2019: California, Forbes,
https://www.forbes.com/places/ca/?sh=3821404e3fe
f ............................................................................... 8
Jonathan V. Hall & Alan B. Krueger, An Analysis of
the Labor Market for Uber’s Driver-Partners in the
United States, 71 Indus. Lab. Rev. 705 (2018) .... 26
vii
Suhauna Hussain, Vox media cuts hundreds of
freelance journalists as AB 5 changes loom, L.A.
Times (Dec. 17, 2019),
https://www.latimes.com/business/story/2019-1217/vox-media-cuts-hundreds-freelancers-ab5 ..... 22
Open Letter from the Indep. Inst. to Governor
Newsom, to Suspend California AB-5 (Apr. 14,
2020),
https://www.independent.org/news/article.asp?id=
13 119...................................................................... 2
Jeff Joseph, Gig workers like and want flexibility,
that’s why they became gig workers, Orange Cnty.
Reg. (Sept. 18, 2020),
https://www.ocregister.com/2020/09/18/gigworkers-like-and-want-flexibility-thats-why-theybecame-gig-workers/............................................. 25
Katie Kilkenny, Everybody Is Freaking Out,
Hollywood Rep. (Oct. 17, 2019),
https://www.hollywoodreporter.com/news/general
news/everybody-is-freaking-freelance-writersscramble-makesense-new-california-law-1248195/
................................................................................ 5
Katherine Lim et al., Independent Contractors in the
U.S. (July 2019), https://www.irs.gov/pub/irssoi/19rpindcontractorinus.pdf ................................ 7
viii
Anu Madgavkar, et al., Human capital at work: The
value of experience, McKinsey Global Institute
(June 2, 2022),
https://www.mckinsey.com/capabilities/peopleand-organizational-performance/ourinsights/human-capital-at-work-the-value-ofexperience ............................................................. 26
Isabelle Morales, List of Personal Stories of Those
Harmed by California's AB5 Law, Americans for
Tax Reform (July 26, 2022),
https://www.atr.org/ab5/ ...................................... 22
New Jobs America, Measuring the Salary Value of
Education and Work Experience in Massachusetts:
A Regression-Model Study of Salaries in New-Hire
Job Postings (Nov. 22, 2019),
https://www.newmassjobs.com/singlepost/measuring-the-salary-value-of-educationand-work-experience-in-massachusetts#viewer8lhp5 ..................................................................... 27
NFIB, Independent Contractors, 8 Nat’l Small Bus.
Poll, no. 6 (2008),
http://www.411sbfacts.com/files/SBP_V8I6_IndyC
ontract_1_6.pdf ....................................................... 8
ix
Rachel Oh, From interpreters and journalists to pet
sitters, California’s gig economy law has
independent contractors fretting, Peninsula Press
(Dec. 23, 2019),
https://peninsulapress.com/2019/12/23/frominterpreters-and-journalists-to-pet-sitterscalifornias-gig-economy-law-has-independentcontractors-fretting/ ............................................. 25
Adam Ozimek, Freelance Forward Economist Report,
Upwork (2021),
https://www.upwork.com/research/freelanceforward-2021 ........................................................ 24
Mark S. Pulliam, The Exploitation of Labor and
Other Union Myths, 24 Indep. Rev. 409, at 429
(2019),
https://www.independent.org/pdf/tir/tir_24_3_06_p
ulliam.pdf ............................................................. 24
Gig Economy Statistics & Trends for 2021 and
Beyond, Shift Pixy (Feb. 18, 2021),
https://shiftpixy.com/gig-economy-statistics/ ........ 7
x
Alison Stein, Independent couriers’ reaction to
employee reclassification: learnings from Geneva,
Medium (Sept. 22, 2020),
https://medium.com/uber-under-thehood/independent-couriers-reaction-to-employeereclassification-learnings-from-genevae3885db12ea3 ....................................................... 21
Economic News Release, U.S. Bureau of Lab. Stats.,
Contingent and Alternative Employment
Arrangements (June 7, 2018),
https://www.bls.gov/news.release/archives/conemp
_06072018.htm ....................................................... 7
News Release, U.S. Bureau of Lab. Stats., Employer
Costs for Employee Compensation––December
2022 (Mar. 17, 2023),
https://www.bls.gov/news.release/pdf/ecec.pdf .... 19
Holly Wade & Andrew Heritage, Small Business
Problems & Priorities, NFIB Rsch. Ctr. (10th ed.
2020), https://assets.nfib.com/nfibcom/NFIBProblems-and-Priorities-2020.pdf ....................... 20
Barbara Weltman, How Much Does an Employee Cost
You?, U.S. Small Bus. Admin. (Aug. 22, 2019),
https://proxy.www.sba.gov/blog/how-much-doesemployee-cost-you ................................................ 19
INTEREST OF THE AMICI CURIAE1
The Independent Institute (the “Institute”) is a
nonprofit, nonpartisan public-policy research and
educational organization that is committed to
advancing a peaceful, prosperous, and free society
grounded in the recognition of individual human
worth and dignity. The Institute—which has closely
studied and monitored the wide-ranging economic
consequences of California Assembly Bill 5 (“AB5”)
and its amendments2—believes that AB5 burdens the
political speech of canvassers and causes devastating
harm to independent contractors and small
businesses. The Institute has been studying AB5 and
its consequences for over three years and penned an
open letter to Governor Gavin C. Newsom and
Members of the California State Legislature on behalf
of 153 economists and political scientists, calling for
1 No party’s counsel authored this brief in whole or in part,
and no person or entity, other than amici or their counsel, made
a monetary contribution to fund the brief’s preparation or
submission. All parties in this case were provided timely notice
of amici’s filing of this brief.
2 Unless otherwise stated, references to AB5 and statutory
citations refer to the amended law.
2
AB5’s suspension.3 The Institute has also been active
amicus participant in similar suits challenging AB5’s
constitutionality, including filing amicus briefs in a
similar First Amendment suit brought by the
American Society of Journalists and Authors
(“ASJA”), see, e.g. Amicus Br. of the Independent
Institute, et al., ASJA v. Bonta, No. 21-1172 (U.S.
April 22, 2022), and the Institute’s scholars and its
late founder and CEO David J. Theroux also filed an
amicus brief in support of app-based workers in a suit
challenging AB5 on Equal Protection grounds, see
Amicus Br. of David R. Henderson et al., Olson v.
California, No. 20-55267 (9th Cir. May 14, 2020).
The National Federation of Independent Business
Small Business Legal Center, Inc. (“NFIB Legal
Center”) is a nonprofit, public interest law firm
established to provide legal resources and be the voice
for small businesses in the nation’s courts through
representation on issues of public interest affecting
small businesses. It is an affiliate of the National
Federation of Independent Business, Inc. (“NFIB”),
which iwes the nation’s leading small business
association. NFIB’s mission is to promote and protect
3 Open Letter from the Indep. Inst. to Governor Newsom, to
Suspend
California
AB-5
(Apr.
14,
2020),
https://www.independent.org/news/article.asp?id=13 119.
3
the right of its members to own, operate, and grow
their businesses. NFIB represents, in Washington,
D.C., and all 50 state capitals, the interests of its
members.
New Jobs America (“NJA”) is a 501(c)(4) social
welfare organization that advocates for the rapid
growth of new jobs, educates freelance workers and
lawmakers on policy initiatives, and promotes the
rights of freelance workers across America. NJA has
closely studied the political and economic impacts of
AB5, and similar legislation across the country, as
well as the so-called “ABC” test on which AB5 is
modeled. NJA is committed to advocating on behalf of
freelance workers and working to prevent state and
local governments from interfering with the benefits
created by independent contracting.
SUMMARY OF ARGUMENT
AB5 unconstitutionally burdens political speech
and hurts workers and businesses.
California’s
enactment of AB5 pulled the rug out from under more
than one million independent contractors by
converting them to employees. At the same time, AB5
burdens political speech of independent contractors
who work as grassroots canvassers—as well as the
organizations that express their political viewpoint
through canvassers—by imposing content-based
speech restrictions that deprive these speakers of their
4
livelihoods and curtail Californians’ ability to
communicate political messages through canvassing.
AB5 is therefore incompatible with the First
Amendment and should have been struck down by the
Ninth Circuit for failure to satisfy constitutional
scrutiny.
The Ninth Circuit, however, went the opposite
way. The panel latched on to California’s framing of
AB5 as a generally applicable “economic regulation”
that does not implicate speech. See Pet.App. at 14a–
16a (majority op.). But that purported “economic
regulation,” as the dissent noted, “turn[s]
predominantly, if not entirely, on the content of the
workers’ speech.” Pet.App. at 21a (dissenting
op.). The panel’s attempt to reframe AB5 as a
generally applicable and content neutral law—and to
avoid applying the appropriate level of constitutional
scrutiny—is contrary to this Court’s jurisprudence.
Further, the panel ignored the function-or-purpose
test articulated in Reed v. Town of Gilbert, 576 U.S.
155 (2015), deepening a circuit split regarding
application of that test that only this Court can
resolve.
AB5 has fundamentally transformed California’s
labor market for the worse, harming independent
contractors and businesses alike. By the Legislature’s
own count, hundreds of thousands of jobs are lost as a
result of AB5 and businesses bear the burden of gap-
5
filling with more expensive and less flexible options.
And independent contractors are losing the benefits of
flexibility, autonomy, and economic opportunity that
encouraged them to become independent contractors
in the first place. The Court should grant plenary
review to correct these serious constitutional and
societal harms.
ARGUMENT
California’s AB5 codifies a stringent test that
requires nearly all independent contractors in
California—with only limited, admittedly “arbitrary,”
exemptions4—to be reclassified as employees. See Cal.
Lab. Code § 2775(b)(1) (citing Dynamex Operations W.,
Inc. v. Super. Ct. of L.A., 416 P.3d 1 (Cal. 2018)). This
harsh result did not improve with amendment.
Instead, the amendments (2020 California Assembly
Bills 170 and 2257) further entrenched AB5’s
arbitrary,
business-killing
mandates,
adding
4 Katie Kilkenny, Everybody Is Freaking Out, Hollywood Rep.
(Oct.
17,
2019),
https://www.hollywoodreporter.com/news/generalnews/everybod
y-is-freaking-freelance-writers-scramble-makesense-newcalifornia-law-1248195/ (quoting AB5’s author, Assemblywoman
Lorena Gonzalez).
6
exemptions for only a few politically favored groups.5
The majority of independent contractors in
California—including Petitioners who are, and use,
canvassers and door knockers for political
organizations—remain subject to AB5’s restrictions.
See Pet. at 8–9.
Independent contractors are widespread in a broad
variety of industries. Indeed, “the rise of independent
contractors has served to ignite large portions of the
California economy, encourage entrepreneurship, and
provide income for an estimated 4 million workers” in
California
alone.6
Nationally,
independent
5 See Olson v. California, 62 F.4th 1206, 1219 (9th Cir. 2023)
(finding plausible Plaintiffs’ allegations that AB5’s exemptions
“were the result of ‘lobbying’ and ‘backroom dealing’” and
identifying support).
6 Assembly Floor Analysis, Cal. Legis. Info., at 2 (Sept. 10,
2019),
https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?
bill_id=201920200AB5 (quoting analysis provided by the
Southwest California Legislative Council); see also Annette
Bernhardt, et al., Independent Contracting in California: An
Analysis of Trends and Characteristics Using Tax Data, UC
Berkeley
Labor
Center
(Mar.
1,
2022),
https://laborcenter.berkeley.edu/independent-contracting-incalifornia/#s-2
(identifying
approximately
2.7
million
Californians as independent contractors based on 2016 tax data).
7
contractors account for approximately ten percent of
the American workforce,7 more than ten million
workers as of 2017.8 And independent contractors are
7 Katherine Lim et al., Independent Contractors in the U.S.,
at
58
(July
2019),
https://www.irs.gov/pub/irssoi/19rpindcontractorinus.pdf (noting that 10.56% of the U.S.
workforce received a Form 1099). Some metrics identify even
higher percentages of the population as potential independent
contractors. See Katherine G. Abraham, et al., The Independent
Contractor Workforce: New Evidence On Its Size and Composition
and Ways to Improve Its Measurement in Household Surveys,
Nat’l Bureau Econ. Research, Working Paper 30997 (Mar. 2023),
https://www.nber.org/papers/w30997 (noting that the share of
independent contractors in the labor force may be “about 15% of
all workers.”); Gig Economy Statistics & Trends for 2021 and
Beyond, Shift Pixy (Feb. 18, 2021), https://shiftpixy.com/gigeconomy-statistics/ (reporting that “the number of gig economy
workers in the U.S. (either through primary or secondary jobs) is
36%” (citation omitted)).
8 Economic News Release, U.S. Bureau of Lab. Stats.,
Contingent and Alternative Employment Arrangements (June 7,
2018),
https://www.bls.gov/news.release/archives/conemp_06072018.ht
m. Due to the difficulty in identification, the total number of
independent contractors in the United States may be even higher.
See, e.g., Edelman Data & Intelligence, Freelance Forward 2022,
Upwork (2022), https://www.upwork.com/research/freelanceforward-2022 (noting that “a staggering 39% of the U.S.
workforce, or 60 million Americans, performed freelance work” in
2022, earning $1.35 trillion).
8
“indispensable to the smooth operation of the small
business economy, filling production and service needs
when it is inefficient for the firm to do so via regular
employment, providing otherwise unavailable or too
costly expertise on a limited basis, and generally
filling periodic gaps that arise from fluctuating
demand.”9
AB5, therefore, has drastic and harmful
consequences for California—one of the largest
economies in the world10––that are felt most directly
by independent contractors and businesses across the
state. Adding insult to injury, AB5 imposes additional
burdens on the speech of grassroots political advocates
and canvassers that cannot be ignored as merely
“indirect impact.” Pet.App. at 18a (majority op.).
9 NFIB, Independent Contractors, 8 Nat’l Small Bus. Poll, no.
6,
at
2
(2008),
http://www.411sbfacts.com/files/SBP_V8I6_IndyContract_1_6.pd
f.
Best States for Business 2019: California, Forbes,
https://www.forbes.com/places/ca/?sh=3821404e3fef (last visited
Apr. 10, 2023) (“If it were a country, California’s $3.1 trillion
economy would be the fifth biggest in the world, ranked between
Germany and the United Kingdom.”).
10
9
I. THIS
COURT
SHOULD
GRANT
CERTIORARI
BECAUSE
THE
NINTH
CIRCUIT’S DECISION DISREGARDS THIS
COURT’S PRECEDENT AND DEEPENS A
CIRCUIT SPLIT.
Content-based speech restrictions, like those
imposed
by
AB5,
“are
presumptively
unconstitutional.” Reed v. Town of Gilbert, 576 U.S.
155, 163 (2015). The “government has no power to
restrict expression because of . . . its subject matter, or
its content.” Police Dep’t of City of Chicago v. Mosley,
408 U.S. 92, 95 (1972). Speech regulation that “on its
face draws distinctions based on the message a
speaker conveys” are, therefore, generally prohibited
and “may be justified only if the government proves
that they are narrowly tailored to serve compelling
state interests.” Reed, 576 U.S. at 156, 163.
Yet the decision below ignores this fundamental
limit on government power. The Ninth Circuit
bestowed its imprimatur to the content-based speech
restrictions within AB5 largely because of the state’s
incantation of its power to regulate the labor market.
See Pet.App. at 13a, 17a (majority op.). That is, the
panel found that AB5’s distinctions between political
door-knockers and signature-gatherers (not exempt
under AB5) and door-to-door salesmen or newspaper
carriers (exempt from AB5’s mandates) were
acceptable because they were part of a “generally
10
applicable” economic regulation and “do not depend on
the communicative content, if any, conveyed by the
workers but rather on the workers’ occupations,”
while, at the same time, acknowledging that it “might
require some attention to the individual’s speech” to
distinguish between individuals performing exempt
and non-exempt roles. Pet.App. at 18a–19a (majority
op.) (emphasis added). But that self-serving division
cannot be dispositive. This Court’s recent speech
precedents do not allow a content-discriminatory
regulation to escape serious review simply due to the
state’s creative labeling.
This case also reveals a troubling circuit split
regarding the application of the “function or purpose”
test articulated in Reed. See 576 U.S. at 165. As
discussed below, the Ninth Circuit’s surface-level
analysis of AB5’s exemptions ignores this Court’s
warning in Reed that content discrimination may be
“subtle,” and courts must consider whether a
regulation has the “function or purpose” of
distinguishing based on message. This position is
contrary to the robust interpretation of Reed adopted
by the Fourth and Tenth Circuits. And worse yet, like
the Ninth Circuit, the First and Eleventh Circuits
have chosen either only to apply the test in limited
circumstances, or not apply it at all.
This Court’s intervention is required to resolve
these important issues of constitutional law.
11
A. The Ninth Circuit’s Decision Rewrites This
Court’s Precedent From Below.
The Ninth Circuit’s decision subverts this Court’s
precedents by creating a false distinction between a
content-based speech regulation and sweeping
economic schemes or run-of-the-mill occupation
regulations. As the dissent correctly recognized, if the
majority opinion stands “[t]he government could
circumvent the First Amendment simply by hiding
content-based distinctions within a sweeping
regulation.” Pet.App. at 26a. (dissenting op.); cf. Bank
Markazi v. Peterson, 578 U.S. 212, 236–37 (2016)
(Roberts, C.J., dissenting) (“Who would you say
decided your case: the legislature, which targeted your
specific case and eliminated your specific defenses so
as to ensure your neighbor’s victory, or the court,
which presided over the fait accompli?”). Generally
applicable
economic
schemes
or
occupation
regulations may run afoul of the First Amendment,
and “an innocuous justification cannot transform a
facially content-based law into one that is content
neutral.” Reed, 576 U.S. at 166. At bottom, the Ninth
Circuit’s ruling misinterprets or ignores this Court’s
key
content-discrimination
precedents—in
chronological order, Sorrell v. IMS Health Inc., 564
U.S. 552 (2011), Reed, Barr v. Am. Ass’n of Pol.
Consultants, Inc., 140 S. Ct. 2335 (2020), and City of
12
Austin v. Reagan Nat’l Advert. of Austin, LLC, 142 S.
Ct. 1464 (2022)—and should be reversed.
First, contrary to the Ninth Circuit’s mistaken
description, Sorrell does not justify its false distinction
between speech and economic regulations. Rather,
Sorrell explicitly rejected the argument the Ninth
Circuit relies on here—that the challenged law is
merely a generally applicable economic regulation—
and struck down a content-based restriction that
disfavored pharmaceutical marketing, which is
“speech with a particular content.” Sorrell, 564 U.S.
at 564. This Court went further still and found that
the challenged regulation imposed “speaker-based
restrictions” because the law burdened speech
differently based on the speaker’s identity. Id. Thus
the regulation at issue in Sorrell, like AB5, “on its face
burdens disfavored speech by disfavored speakers.”
Id. AB5 should be similarly struck down for its
content-based and speaker-based regulations.
Second, the Ninth Circuit diminishes Reed’s
import, ignoring its application completely after
finding that AB5 is a “regulation of economic activity,
not speech.” Pet.App. at 17a (majority op.). Reed
explicitly admonishes against laws “singl[ing] out
specific subject matter for differential treatment.”
Reed, 576 U.S. at 169. Reed further cautions that
some content-based restrictions “are more subtle,
defining regulated speech by its function or purpose”
13
but that does not change their content-based nature or
the constitutional scrutiny required. Id. at 163–64.
However, when faced with the differential treatment
imposed by AB5, the panel ducked the issue, citing its
own “surface-level labels . . . to avoid First
Amendment scrutiny.” Pet.App. at 27a. (dissenting
op.).
Third, although it avoids mentioning Barr entirely,
the Ninth Circuit’s conclusion that the First
Amendment is only implicated when regulations
specifically target speech similarly misunderstands
and seeks to limit this Court’s Barr decision. Cf.
Pet.App. at 18a (majority op.). Indeed, contrary to the
Ninth Circuit’s limitation, Barr makes clear that
special carveouts in a generally applicable law that
favor certain messages over others—like the
exemptions for jobs that use commercial speech that
are exempt under AB5—violate the First Amendment.
Barr, 140 S. Ct. at 2356. There, this Court held
unconstitutional a special exception within the
Telephone Consumer Protection Act—which generally
prohibited robocalls to cell phones to advance political
speech—for robocallers seeking to collect government
debt. Id. at 2347, 2356. Under Barr, a content-based
exception to a general rule is still a content-based
regulation requiring strict scrutiny review.
Barr further rejected the false dichotomy between
content-based
regulations
and
occupational
14
regulations like that relied on by the Ninth Circuit.
Cf. Pet.App. at 19a (majority op.). The government in
Barr, like California, argued that the challenged
regulation did not regulate content but sought to draw
distinctions based on “speakers.” Id. at 2347. The
Court firmly denied this argument, reasoning that
“‘the fact that a distinction is speaker based’ does not
‘automatically render the distinction content neutral,’”
and, instead, “laws favoring some speakers over others
demand strict scrutiny when the legislatures speaker
preference reflects a content preference.” Id. (citations
omitted). Indeed, this Court has made clear that
“speech restrictions based on the identity of the
speaker are all too often simply a means to control
content.” Citizens United v. Fed. Election Comm’n,
558 U.S. 310, 340 (2010) (emphasis added); see also
Pet.App. at 27a (dissenting op.) (analyzing Barr and
noting that the panel opinion’s position was rejected
by this key precedent).
Finally, the Ninth Circuit’s decision subverts this
Court’s most recent content-discrimination decision in
Reagan National. Contrary to the Ninth Circuit’s
view, that decision does not give courts license to
ignore content-based speech regulations. See Pet.App.
at 19a (majority op.). Instead, Reagan National is a
limited opinion in which the Court concluded that a
sign ordinance was not “automatically” a contentbased regulation merely because it required the Court
15
to read the sign to determine the binary issue of
whether a sign refers to something on the same
premises or another location. Reagan Nat’l, 142 S. Ct.
at 1471–72.
Here, by contrast, rather than
“distinguish[ing] based on location,” id. at 1472, AB5
requires consideration of the broader subject matter of
a communication—e.g., political versus commercial
speech—and makes distinctions based on the content
of the communication.
Under no circumstances can Reagan National be
read to empower states to arbitrarily penalize
businesses based on the message that business
espouses. Indeed, “[t]his Court’s precedents are
deeply skeptical of” such laws. See Nat’l Inst. of Fam.
& Life Advocs. v. Becerra, 138 S. Ct. 2361, 2378 (2018).
This Court should be especially suspicious of sweeping
laws that draw irrational distinctions between
similarly situated groups and are motivated by
political animus, which a different Ninth Circuit panel
recently acknowledged may be at work with AB5. See
Olson, 62 F.4th at 1219–20. This Court should grant
certiorari to ensure that arbitrary and politically
motivated laws hiding content-based speech
restrictions receive meaningful constitutional review.
16
B.
The Circuits Are Split On How To Apply
the Reed Function-or-Purpose Test.
Additionally, the circuits are in deep confusion
regarding application of Reed’s “function or purpose”
instruction. Reed, 576 U.S. at 163. The decision below
does not mention the function-or-purpose test at all,
despite criticism from the dissent. See Pet.App. at 22a
(dissenting opinion). Instead, the Ninth Circuit
opinion looked to legislative labels to conclude that
AB5 regulates occupational groups rather than speech
content. Id. at 19a (majority opinion).
As Petitioner points out, the Ninth Circuit’s
decision stands in stark contrast to the Fourth and
Tenth Circuits, which employ a robust interpretation
of the function-or-purpose test. See Pet. at 23–25. The
Fourth Circuit applied Reed, and the requisite strict
scrutiny standard, to strike down an “anti-robocall
statute [that] applies to calls with a consumer or
political message but does not reach calls made for any
other purpose.” Cahaly v. Larosa, 796 F.3d 399, 405
(4th Cir. 2015); accord Barr, 140 S. Ct. at 2356; see also
Pet. at 24. And the Tenth Circuit concluded that a
curfew restriction that treated solicitors differently
based on whether they were primarily commercial
salesmen or a “civic, religious, philosophical, and
ideological solicitors who incidentally sell a good or
service” was a content-based restriction. Aptive Env’t,
17
LLC v. Town of Castle Rock, 959 F.3d 961, 982 (10th
Cir. 2020).
At the same time, like the Ninth Circuit, the First
and Eleventh Circuits have all but ignored Reed’s
function-or-purpose test. The First Circuit refused to
apply the test unless the restriction at issue
“depend[s] entirely for its application on the
‘communicative content.’” March v. Mills, 867 F.3d 46,
58 (1st Cir. 2017); see also Pet. at 24. And while the
Eleventh Circuit avoided an ultimate decision on the
function-or-purpose test, it discounted the test as
dicta. Harbourside Place, LLC v. Town of Jupiter, 958
F.3d 1308, 1319 (11th Cir. 2020); see also Pet. at 25.
Thus, the Ninth Circuit’s blatant disregard of one of
this Court’s key speech precedents demonstrates a
pattern from certain circuits that must be corrected.
This Court should grant certiorari to resolve the
circuit split regarding Reed’s application.
II. THIS CASE PRESENTS AN ISSUE OF
EXCEPTIONAL IMPORTANCE MERITING
REVIEW BECAUSE AB5 SUBSTANTIALLY
BURDENS THE SPEECH OF INDEPENDENT
CONTRACTORS AND HARMS EMPLOYERS,
WORKERS, AND THE PUBLIC.
A.
Recategorizing Independent Contractors
As Employees Impermissibly Burdens
Political Speech.
18
AB5 burdens independent contractors who engage
in grassroots political communications and silences
organizations that present their message via political
canvassers. It does so by discriminating between
canvassers (and the organizations that hire them)—
categorizing only some canvassers as employees and
imposing heightened financial barriers on their use
while exempting other canvassers from AB5’s strict
requirements—based on the content of the message
expressed by the canvassers. These First Amendment
harms are serious, and, although the case comes in an
interlocutory posture, this constitutional violation
cannot wait for review down the road.
As
demonstrated here, AB5 harms both the political
process—working to burden political messages that
would otherwise be shared by canvassers—and it
keeps everyday Californians from earning a living.
First, AB5 silences political speakers by imposing
content-based limitations on political canvassers’
speech. As Petitioners make clear, AB5 “singles out
specific subject matter for differential treatment.”
Reed, 576 U.S. at 169; see Pet. at 6–7, 27–28. That is,
under AB5, those who go door-to-door to persuade
people of the merits of a Hoover vacuum have the
freedom of an independent contractor. But if that
same person goes door-to-door to persuade someone of
the merits of voting Hoover for president that
canvasser must be treated as an employee with all of
19
the attending legal obligations. See Pet. at 6–8. That
“is about as content-based as it gets.” Cf. Barr, 140 S.
Ct. at 2346 (analyzing a law permitting certain
robocalls and forbidding others).
Second, AB5 burdens the political speech of
canvassers working as independent contractors by
reducing the number of paid political canvasser
positions across the board and thereby limiting
political canvassers’ ability to make a living. It is
indisputable
that
recategorizing
independent
contractors as employees is expensive and increases
costs for businesses. Indeed, as a general rule, the cost
of an employee “is typically 1.25 to 1.4 times the
salary.”11
This is because hiring an individual
employee—versus hiring an independent contractor—
requires a small business to cover payroll costs,
insurance coverage, and likely fringe benefits.12 AB5,
11 Barbara Weltman, How Much Does an Employee Cost You?,
U.S.
Small
Bus.
Admin.
(Aug.
22,
2019),
https://proxy.www.sba.gov/blog/how-much-does-employee-costyou; News Release, U.S. Bureau of Lab. Stats., Employer Costs
for Employee Compensation––December 2022 (Mar. 17, 2023),
https://www.bls.gov/news.release/pdf/ecec.pdf (finding that the
average cost of benefits accounted for 31% of employer costs for
employee compensation).
12 Weltman, supra note 11.
20
therefore, creates added costs for every business that
previously
employed
independent
contractor
canvassers to perform non-exempted work. And, in
addition to the financial cost of hiring employees, AB5
imposes non-financial costs by causing businesses to
divert energy and resources to hiring, retention, and
related concerns like employee training, management,
and regulations,13 which only intensify under AB5’s
requirement to forego independent contractors in
favor of hiring employees. Many businesses simply
cannot afford the additional costs and do not replace
independent contractors with employees when
independent contractors are no longer available.
As a result, AB5’s forced mass reclassification
causes a net decrease of employment opportunities,
13 Holly Wade & Andrew Heritage, Small Business Problems
& Priorities, NFIB Rsch. Ctr., at 9-11 (10th ed. 2020),
https://assets.nfib.com/nfibcom/NFIB-Problems-and-Priorities2020.pdf (collecting data showing that employers face increased
problems, when compared to 2016 surveys, with “Locating
Qualified Employees” (ranked 2nd with 31% labeling as
“critical”); “Finding and Keeping Skilled Employees” (ranked 5th
with 26% labeling as “critical”); “Training Employees” (ranked
32nd);
“Managing
Employees”
(ranked
35th);
“Hiring/Firing/Employment Regulations” (ranked 43rd); and
“Employee Turnover” (ranked 50th)).
21
resulting in fewer jobs across the board.14 Indeed, as
the result of a recent mandatory reclassification of
Uber drivers from independent contractors to
employees in Geneva, Switzerland approximately 77%
of couriers—a thousand people—lost their jobs.15 This
is certainly the case in California, as the California
Legislative Analyst’s Office projected that only a
“much smaller [number of workers] than the roughly
14 Cf. Lorenzo E. Bernal-Verdugo et al., Labor Market
Flexibility and Unemployment: New Empirical Evidence of Static
and Dynamic Effects, Int’l Monetary Fund, Working Paper No.
2012/064,
at
12
(2012), https://www.imf.org/en/Publications/WP/Issues/2016/12/3
1/Labor-Market-Flexibility-and-Unemployment-New-EmpiricalEvidence-of-Static-and-Dynamic-25753 (finding that “policies
that enhance labor market flexibility should reduce
unemployment”); id. at 3 (observing that regulations “obstruct job
creation and tend to be associated with higher levels of
unemployment”); Juan Botero et al., The Regulation of Labor, 119
Q.
J.
Econ.
1339,
1379
(2004),
https://academic.oup.com/qje/articleabstract/119/4/1339/1851075?redirectedFrom=fulltext (same).
15 See Alison Stein, Independent couriers’ reaction to employee
reclassification: learnings from Geneva, Medium (Sept. 22, 2020),
https://medium.com/uber-under-the-hood/independent-couriersreaction-to-employee-reclassification-learnings-from-genevae3885db12ea3 (finding that reclassification of Uber drivers as
employees in Geneva “put 77% of couriers, or 1,000 people, out of
work”).
22
1 million [independent] contractors” who are affected
by AB5 would be rehired as employees.16 Political
canvassers are no exception. Even if some were to see
this reduction as a societal benefit, “the enshrinement
of constitutional rights necessarily takes certain policy
choices off the table.” D.C. v. Heller, 554 U.S. 570, 636
(2008).
Indeed, Petitioners are a prime example of how
political canvasser positions have simply disappeared
or been limited in the wake of AB5. Petitioner
16 The 2020-21 Budget: Staffing to Address New Independent
Contractor Test, Cal. Legis. Analyst’s Off. (Feb. 11, 2020),
https://lao.ca.gov/Publications/Report/4151; see, e.g., Suhauna
Hussain, Vox Media cuts hundreds of freelance journalists as AB
5
changes
loom,
L.A.
Times
(Dec.
17,
2019),
https://www.latimes.com/business/story/2019-12-17/vox-mediacuts-hundreds-freelancers-ab5 (reporting that Vox Media cut ties
with more than 200 independent contractors and replaced them
with only twenty employees); Karen Anderson, As with
California’s disastrous AB 5 law, the PRO Act would hurt major
sectors of the independent workforce, Americans for Prosperity
(June 4, 2021), https://americansforprosperity.org/ab5-pro-acthurting-workforce/ (listing examples); Isabelle Morales, List of
Personal Stories of Those Harmed by California’s AB5 Law,
Americans
for
Tax
Reform
(July
26,
2022),
https://www.atr.org/ab5/
(collecting
676
testimonials
demonstrating how AB5 “has destroyed the dreams and
livelihoods of countless Golden State households”).
23
Mobilize the Message abandoned California because,
due to AB5’s restrictions, it could not afford to hire
door knockers and canvassers as employees. See Pet.
at 10.
Similarly, AB5 has already prevented
Petitioner Moving Oxnard Forward, and its political
action committee Petitioner Starr Coalition for
Moving Oxnard Forward, from participating in one
election. See id. As Judge VanDyke made clear in his
dissent to the Ninth Circuit panel opinion, Petitioners
face “cost-prohibitive expenses under [AB5] because of
the content of the speech in which they engage.”
Pet.App. at 28a (dissenting op.).
B.
AB5 Harms Independent Contractors.
In addition to impermissibly burdening political
speech, AB5 restricts the rights of independent
contractors “to follow a chosen profession free from
unreasonable governmental interference,” Greene v.
McElroy, 360 U.S. 474, 492 (1959). Specifically, AB5
interferes with independent contractors’ flexibility
and freedom to live according to their needs. In 2022,
it is estimated that 60 million Americans performed
freelance work annually, contributing approximately
$1.35 trillion to the U.S. economy.17 And in 2022,
17 See Edelman Data & Intelligence, supra note 8.
24
professionals increasingly report that they are
exploring the benefits of freelancing, for extra income,
flexibility and control over their future, or as a way to
find more meaningful work.18 In general, independent
workers
overwhelmingly
prefer
to
remain
independent and do not want to be treated as
“employees.”19 Indeed, nearly half of all freelancers
agree that “there is no amount of money that would
convince them to take a traditional job.”20
Independent contracting also provides muchneeded flexibility for many individuals and is often the
most viable option for workers trying to balance their
jobs
with
competing
personal
obligations.21
18 See Edelman Data & Intelligence, supra note 8.
19 See, e.g., Mark S. Pulliam, The Exploitation of Labor and
Other Union Myths, 24 Indep. Rev. 409, at 429 (2019),
https://www.independent.org/pdf/tir/tir_24_3_06_pulliam.pdf
(“In the ‘gig economy’ . . . many workers prefer the flexible hours
of independent-contractor arrangements in lieu of traditional
employment.”).
Adam Ozimek, Freelance Forward Economist Report,
Upwork (2021), https://www.upwork.com/research/freelanceforward-2021 (emphasis added).
20
21 Edelman Data & Intelligence, supra note 8 (reporting that
69% of surveyed freelancers state that they have a “healthy work
life balance” and 73% of freelancers say freelancing gives them
25
Independent contracting may be the only option for a
health-compromised individual who must work
remotely, a single parent without reliable childcare, or
an individual caring for an ailing loved one.22
Independent contractor status also provides greater
flexibility to individuals seeking entrepreneurial
opportunities, allows independent contractors to be
their “own boss,” and to exercise total control over
when and how work is performed.23
“flexibility to address [their] personal, mental, or physical
needs”).
22 Jeff Joseph, Gig workers like and want flexibility, that’s
why they became gig workers, Orange Cnty. Reg. (Sept. 18, 2020),
https://www.ocregister.com/2020/09/18/gig-workers-like-andwant-flexibility-thats-why-they-became-gig-workers/ (providing
examples); Rachel Oh, From interpreters and journalists to pet
sitters, California’s gig economy law has independent contractors
fretting,
Peninsula
Press
(Dec.
23,
2019),
https://peninsulapress.com/2019/12/23/from-interpreters-andjournalists-to-pet-sitters-californias-gig-economy-law-hasindependent-contractors-fretting/ (same).
Direct Selling Ass’n, 2020 Consumer Attitudes &
Entrepreneurship
Study
(2020),
https://www.dsa.org/docs/default-source/research/dsa-ipsos2020-consumerattitudesinfographic2-27.pdf?sfvrsn=68ddfa5_2
(last visited Apr. 10, 2023) (“77% of Americans are interested in
flexible,
entrepreneurial/income-earning
opportunities.”);
Coalition for Workforce Innovation, National Study of 600 Self23
26
Moreover, independent contractor jobs provide
economic opportunities not typically available to
employees.
Individuals serving as independent
contractors, who may not otherwise meet certain work
qualifications, have the opportunity to gain training
and experience in skills not part of their daily work.24
This increased work experience directly correlates to
improved salary options.25 Further, even without the
Identified Independent Contractors, at 17 (Jan. 2020),
https://rilastagemedia.blob.core.windows.net/rilaweb/rila.web/media/media/pdfs/letters%20to%20hill/hr/cwireport-final.pdf (finding that 90% of individuals favor “[a]ffirming
the right of individuals to choose an independent style of work”);
Jonathan V. Hall & Alan B. Krueger, An Analysis of the Labor
Market for Uber’s Driver-Partners in the United States, 71 Indus.
Lab. Rev. 705, 706 (2018) (finding that Uber attracts driverpartners due to “the nature of the work, the flexibility, and the
compensation”).
24 See Coalition for Workforce Innovation, supra note 23, at
10 (finding that 89% of respondents agreed that “[g]ig work has
made it easier for workers to leave a bad situation and try new
opportunities that provide additional benefits, flexibilities and
are more meaningful and rewarding than a traditional job”).
25 See Anu Madgavkar, et al., Human capital at work: The
value of experience, McKinsey Global Institute (June 2, 2022),
https://www.mckinsey.com/capabilities/people-andorganizational-performance/our-insights/human-capital-atwork-the-value-of-experience (“[W]ork experience contributes 40
percent of the average individual’s lifetime earnings” and it “gives
27
added opportunities for experience, independent
contractors may also earn more than their employee
counterparts. Relying on certain studies, the U.S.
Department of Labor found in 2021 that “independent
contractors tend to earn more per hour: Employees
earned an average of $24.07 per hour, self-employed
independent contractors earned an average of $27.43
per hour . . . .”26
that person a track record, which is valuable in and of itself for
the signal it sends to potential future employers”); New Jobs
America, Measuring the Salary Value of Education and Work
Experience in Massachusetts: A Regression-Model Study of
Salaries in New-Hire Job Postings (Nov. 22, 2019),
https://www.newmassjobs.com/single-post/measuring-thesalary-value-of-education-and-work-experience-inmassachusetts#viewer-8lhp5 (finding that, for Massachusetts
employees, “the salary value of work experience contributes eight
times as much to their salary as education does”).
26 See Independent Contractor Status Under the Fair Labor
Standards Act, 86 Fed. Reg. 1168, 1219 (Jan. 7, 2021) (citing,
inter alia, L.F. Katz & A.B. Krueger, The Rise and Nature of
Alternative Work Arrangements in the United States, 1995-2015,
Nat’l Bureau Econ. Research, Working Paper 22667 (2018),
https://www.nber.org/papers/w22667); M. Keith Chen et al., The
Value of Flexible Work: Evidence from Uber Drivers, 127 J. Pol.
Econ. 2735 (2019) (“Uber drivers earn more than twice the
[economic] surplus they would in less-flexible arrangements.”).
28
These benefits are lost when independent
contractors are reclassified as employees.
The
flexibility, autonomy, and control prized by
independent contractors are unique to independent
contracting and simply cannot be replicated in
traditional employment. Therefore, in addition to
burdening speech, AB5 inhibits the right of
independent contractors to earn a living in their
preferred manner and deprives them of status-specific
economic benefits and opportunities.
29
CONCLUSION
For the foregoing reasons, this Court should grant
the petition for a writ of certiorari.
Respectfully Submitted,
Elizabeth Milito
Rob Smith
NFIB SMALL BUSINESS
LEGAL CENTER
555 12th Street, NW
Ste. 1001
Washington, DC 20004
APRIL 10, 2023
Krystal B. Swendsboe
Counsel of Record
Thomas M. Johnson, Jr.
William Turner
WILEY REIN LLP
2050 M Street, N.W.
Washington, D.C. 20036
202.719.7000
kswendsboe@wiley.law
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