While litigation over the controversial Assembly Bill 5 (AB 5) continues throughout the state, a San Diego Superior Court judge recently issued a preliminary injunction enjoining and restraining a company from failing “to comply with California employment law” regarding a category of individuals within the City of San Diego while the litigation is pending. This decision is noteworthy because it appears to require the company to immediately reclassify its independent contractors as employees, despite the fact the Court has not yet ruled on the merits of the City’s claim.
The case was brought by the City Attorney of San Diego against Maplebear, Inc. doing business as InstaCart, a same-day grocery delivery company. The lawsuit asserts a cause of action for Unfair Competition under California’s Business and Professions Code in which the City claims that Instacart “maintains an unfair competitive advantage by misclassifying workers” who provide shopping services as independent contractors instead of employees.
In the Order issued by the Honorable Timothy Taylor, he notes that the probability of one side prevailing is “not free from doubt.” On the other hand, he writes that the City will “more likely than not” be able to establish that Instacart Shoppers “perform a core function” of the business; are not free of control, and are not engaged in an independently established trade, occupation, or business. The Court also points out that while the City has the burden going forward with evidence, Instacart has the burden of establishing proper classification.
Judge Taylor’s Order goes on to note, “[t]he policy of California is unapologetically pro-employee (in the several senses of that word). Dynamex [the case that spawned AB 5] is explicitly in line with that policy. While there is room for debate on the wisdom of this policy, and while other states have chosen another course, it is noteworthy that all three branches of California have now spoken on this issue.” An attitude that is likely to be reiterated again and again as businesses grapple with the fallout from Dynamex and AB 5.
After issuance of Judge Taylor’s Order granting the City’s request for a preliminary injunction, Instacart moved on an ex parte basis to confirm that the preliminary injunction is subject to an automatic stay pending appeal, to stay enforcement of the preliminary injunction pending appeal or, in the alternative, to dissolve the preliminary injunction altogether. Judge Taylor denied Instacart’s ex parte application and the Company has since filed an appeal.