In the case of Olson v. California, 62 F. 4th 1206, decided in March 2023 by the Ninth Circuit Court of Appeals, a California-based Uber driver, Nicole Olson, challenged the constitutionality of Assembly Bill 5 (A.B. 5), the California law that redefined many app-based workers as employees instead of independent contractors. WorkCompAcademy reported on this case soon after it was published.
A.B. 5, as amended, codified the “ABC test” adopted by the Supreme Court of California in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018), to categorize workers as employees or independent contractors for the purposes of California Labor and Unemployment Code provisions..However, A.B. 5 exempted a broad swath of workers from the Dynamex presumption.
Within a year of its enactment, A.B. 5 was amended by A.B. 170 and A.B. 2257. Both bills exempted even more workers from the Dynamex presumption.
Lydia Olson, Miguel Perez, Uber, Inc. and Postmates, Inc. filed a law suit in federal court to enjoin the State of California and the Attorney General of California , from enforcing California Assembly Bill 5 against them. The trial court denied a preliminary injunction, and the plaintiffs appealed. The 9th Circuit Court of Appeals heard argument in that case on November 18, 2020. However, on November 3, 2020, shortly before argument, Proposition 22 was adopted through California’s ballot initiative process.
Olson argued that A.B. 5 violated the Equal Protection Clause of the Fourteenth Amendment by creating an exemption for certain app-based businesses, like errand-running and dog-walking, while not exempting ride-sharing and delivery drivers like herself. This, she claimed, constituted unfair discrimination against a specific class of workers. The trial court ruled against her, and she appealed.
The 9th Circuit panel held that, even under the fairly forgiving rational basis review, Plaintiffs plausibly alleged that A.B. 5, as amended, violated the Equal Protection Clause for those engaged in app-based ride-hailing and delivery services. Thus, Plaintiffs plausibly alleged that the primary impetus for the enactment of A.B. 5 was the disfavor with which the architect of the legislation – Assemblywoman Lorena Gonzalez – viewed Uber, Postmates, and similar gig-based business models.
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Additionally, it ruled that Plaintiffs plausibly alleged that their exclusion from the wide-ranging exemptions, including for comparable app-based gig companies, could be attributed to animus rather than reason. The district court therefore erred by dismissing Plaintiffs’ equal protection claim.
The 9th Circuit panel therefore remanded the case for the district court to reconsider Plaintiffs’ motion for a preliminary injunction, considering the new allegations contained in the Second Amended Complaint.
This case was decided and published on March 17, 2023. Subsequently the Attorney General of California filed a Petition for Rehearing on April 28, 2023.
The Attorney General argued in it’s 62 page Petition that the decision was “a highly unusual departure from this Court’s consistent practice of affording States “wide latitude … in managing their economies.” And went on to provide examples such as “The equal-protection analysis in the panel opinion conflicts with the Court’s recent decision in American Society of Journalists (Am. Soc’y of Journalists & Authors Inc. v. Bonta 15 F.4th 954 (9th Cir. 2021)) – and many other decisions of this Court and the Supreme Court treating rational-basis review as “a paradigm of judicial restraint.”
Court Docket entries show a flurry of Amicus briefs were then filed by various interest groups arguing positions supporting the Petition for Rehearing including the states of Arizona, Washington, Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Commonwealth of Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, Commonwealth of the Northern Mariana Islands, Oregon and Vermont.
On December 18, 2023 The Court of Appeals for the 9th Circuit granted the Petition for Rehearing. The order said “Upon the vote of a majority of nonrecused active judges, it is ordered that this case be reheard en banc pursuant to Federal Rule of Appellate Procedure 35(a) and Circuit Rule 35-3. The three-judge panel opinion is vacated.”
En banc oral argument will take place during the week of March 18, 2024, in San Francisco, California. The date and time will be determined by separate order.