Lawson v. Grubhub, Inc.

• Court: District Court, N.D. California
• Decided: May 30, 2023
• Docket: 3:15-cv-05128
• Status: Unknown

Opinion

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: MOTION FOR ENTRY OF 9 v. JUDGMENT

10 GRUBHUB, INC., et al., Re: Dkt. No. 317 Defendants. 11

12 13 Before the Court is Grubhub’s motion for entry of judgment under Federal Rule of Civil 14 Procedure 54(b), or in the alternative to certify an interlocutory appeal under 28 U.S.C. § 1292(b) 15 and to stay. (Dkt. No. 317.)1 Having carefully considered the briefing, the Court determines oral 16 argument is unnecessary, see N.D. Cal. Civ. L.R. 7-1(b), VACATES the June 8, 2023 hearing, and 17 DENIES the motion. 18 BACKGROUND 19 The operative complaint has five counts. (Dkt. No. 41.) On behalf of himself and “all 20 similarly situated individuals,” Mr. Lawson brings claims for expense reimbursement, minimum 21 wage, overtime, violation of California’s Unfair Competition Law (“UCL”), and civil penalties 22 under California’s Private Attorneys General Act (“PAGA”). (Id. at 8–10; see Dkt. No. 70 at 4 23 n.1; Dkt. No. 78.) 24 The parties stipulated to bifurcate the case. (Dkt. No. 122.) The first phase would address 25 Mr. Lawson’s individual claims and whether he is an “aggrieved employee” who can represent 26 similarly situated individuals under PAGA; that is, whether he suffered a California Labor Code 27 1 violation. Assuming the Court found he suffered at least one violation, the second phase would 2 address the PAGA penalties claim. See Lawson v. Grubhub, Inc. (“Lawson II”), 13 F.4th 908, 910 3 (9th Cir. 2021). The Court held a bench trial on phase one in 2017 and entered judgment for 4 Grubhub on counts one, two, and three (expense reimbursement, minimum wage, and overtime). 5 (Dkt. Nos. 221, 222); Lawson v. Grubhub, Inc. (“Lawson I”), 302 F. Supp. 3d 1071 (N.D. Cal. 6 2018). On appeal, the Ninth Circuit vacated the judgment in light of intervening developments in 7 California law and remanded. Lawson II, 13 F.4th at 916–17. 8 As to count one (expense reimbursement), the Ninth Circuit remanded the issue whether 9 the Borello standard or the ABC test determines whether Plaintiff is an “employee” entitled to 10 expense reimbursement. Id. at 917. As to counts two (minimum wage) and three (overtime), the 11 Ninth Circuit held the ABC test governs, unless an exemption applies, and remanded for the Court 12 to apply the test. See Lawson II, 13 F.4th at 916–17. 13 Following remand, this Court concluded in an order on Plaintiff’s motion for partial 14 summary judgment that the Borello standard governs the expense reimbursement claim; thus, the 15 Court’s previous finding that Mr. Lawson was not an employee under that standard governs 16 disposition of that claim. (Dkt. No. 292; see Dkt. No. 313 at 28 & n.7.) As for the minimum 17 wage and overtime claims, the Court gave the parties the opportunity to supplement the record and 18 submit Federal Rule of Civil Procedure 52 briefs. The Court then found Grubhub had not met its 19 burden to show the business-to-business exemption applies and had not met its burden to establish 20 Prong B of the ABC test. Accordingly, Mr. Lawson is an employee for purposes of those claims. 21 (Dkt. No. 313.) The Court also found Mr. Lawson is entitled to judgment on his minimum wage 22 claim, but that Grubhub is entitled to judgment on Mr. Lawson’s overtime claim. (Id. at 34.) The 23 Court has not yet adjudicated phase two—the PAGA penalties claim. 24 Grubhub now seeks entry of separate judgment on Plaintiff’s individual expense 25 reimbursement, minimum wage, and overtime claims. (Dkt. No. 317.) Alternatively, Grubhub 26 asks the Court to certify for interlocutory appeal its orders on Plaintiff’s motion for partial 27 summary judgment and on the parties’ Rule 52 briefs. (See Dkt. Nos. 292, 313.) And, if either 1 resolved. 2 DISCUSSION 3 I. Entry of Judgment 4 Generally, the U.S. Courts of Appeals have jurisdiction over appeals from “final decisions 5 of the district courts.” 28 U.S.C. § 1291; see Jewel v. Nat’l Sec. Agency, 810 F.3d 622, 627 (9th 6 Cir. 2015) (“the foundational rule [is] that generally we have jurisdiction to hear an appeal only if 7 it arises from a final order”). Rule 54(b) is an “important exception.” Jewel, 810 F.3d at 627. 8 Under the Rule, “[w]hen an action presents more than one claim for relief . . . or when multiple 9 parties are involved,” a court may “direct entry of a final judgment as to one or more, but fewer 10 than all, claims or parties.” Fed. R. Civ. P. 54(b). 11 There are two requirements. First, the order adjudicating fewer than all the claims in the 12 case must be an “ultimate disposition,” “sufficiently divisible from the other claims such that the 13 case would not inevitably come back to this court on the same set of facts.” Curtiss-Wright Corp. 14 v. Gen. Elec. Co., 446 U.S. 1, 7 (1980). Second, there must be “no just reason for delay.” Jewel, 15 810 F.3d at 628 (quoting Fed. R. Civ. P. 54(b)). The second requirement considers both the 16 parties’ interests and “judicial administrative interests” to “assure that application of the Rule 17 effectively preserves the historic federal policy against piecemeal appeals.” Wood v. GCC Bend, 18 LLC, 422 F.3d 873, 878 (9th Cir. 2005) (cleaned up). “Judgments under Rule 54(b) must be 19 reserved for the unusual case in which the costs and risks of multiplying the number of 20 proceedings and of overcrowding the appellate docket are outbalanced by pressing needs of the 21 litigants for an early and separate judgment as to some claims or parties.” Morrison-Knudsen Co. 22 v. Archer, 655 F.2d 962, 965 (9th Cir. 1981). 23 The Court’s orders are an ultimate disposition of Mr. Lawson’s individual claims, other 24 than his own PAGA penalties claim. His expense reimbursement claim fails because he is not an 25 employee under Borello and therefore is not entitled to expense reimbursement under Cal. Lab. 26 Code § 2802. (Dkt. No. 292.) He is entitled to judgment on his minimum wage claim because he 27 is an employee under the ABC test, with damages in the amount of $65.11. (Dkt. No. 313.) His 1 overtime damages. (Id.) 2 However, Mr. Lawson’s individual claims are not “sufficiently divisible” from the 3 unresolved PAGA penalties claim. Curtiss-Wright, 446 U.S. at 7. First, the PAGA penalties 4 claim is unresolved as to the specific violations Mr. Lawson suffered, so there is complete overlap 5 between that aspect of the PAGA penalties claim and the claims on which Grubhub seeks to enter 6 judgment. See Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906, 1915 (2022) (“[PAGA] 7 gives employees a right to assert the State’s claims for civil penalties on a representative basis, but 8 it does not create any private rights or private claims for relief.”). The rest of the PAGA penalties 9 claim also overlaps almost entirely with Mr. Lawson’s individual claims: they all arise from the 10 legal right to be classified as an employee and paid accordingly. See Wood, 422 F.3d at 882 (“the 11 only legal right asserted is the right not to be discriminated against on account of age”). The exact 12 same law applies: Borello governs the expense reimbursement claim, the ABC test governs the 13 minimum wage and overtime claims, and the business-to-business exemption may be available. 14 The facts overlap a lot: Grubhub’s policies, business model, and operations will be as integral to 15 the remaining claims as to Mr. Lawson’s. The main differences are each worker’s hours, pay, 16 potential operation of her own bona fide delivery business, and how she spent her “on-block” 17 time. (See Dkt. No. 313.) But even those differences go to core areas of overlap: whether a 18 worker is an employee under the ABC test, whether the business-to-business exemption applies, 19 and whether certain on-block time is compensable work time. 20 Resolution of those questions for Mr. Lawson cannot be cleanly separated from resolution 21 of the PAGA penalties claim. See Curtiss-Wright, 446 U.S. at 10 (noting the district court must 22 analyze “the interrelationship of the claims so as to prevent piecemeal appeals in cases which 23 should be reviewed only as single units”); e.g., Tsyn v. Wells Fargo Advisors, LLC, No. 14-CV- 24 02552-LB, 2016 WL 1718139, at *2–3 (N.D. Cal. Apr. 29, 2016) (denying Rule 54(b) judgment 25 where dismissed federal wage claim overlapped “almost entirely” with state wage claims). For 26 example, an immediate appeal from a Rule 54(b) judgment on Mr. Lawson’s claims would cover 27 much of the same ground as a later appeal from a final judgment on the PAGA penalties claim. 1 overlap the greater the chance that this court will have to revisit the same facts—spun only slightly 2 differently—in a successive appeal. . . . We cannot afford the luxury of reviewing the same set of 3 facts in a routine case more than once without a seriously important reason.”). 4 As to the second requirement, there are just reasons to wait until the entire case is resolved 5 to enter judgment. See Jewel, 810 F.3d at 630 (“Our consideration of the single issue served up 6 for interlocutory review is more likely to cause additional delay than it is to ameliorate delay 7 problems.”). Grubhub seeks not just a separate judgment, but a separate judgment with a stay of 8 the PAGA penalties claim. Thus, granting Grubhub’s request means delaying the ultimate 9 resolution of this case. But this case was filed in 2015 and has already been appealed and 10 remanded once. Mr. Lawson seeks PAGA penalties for alleged labor violations that occurred 11 many years ago. Any further delay to finally resolving the PAGA penalties claim will lead to 12 faded memories, lost evidence, and a diminished opportunity to resolve the PAGA penalties claim 13 on the merits. See Pagtalunan v. Galaza, 291 F.3d 639, 643 (9th Cir. 2002) (“Unnecessary delay 14 inherently increases the risk that witnesses’ memories will fade and evidence will become stale.”); 15 e.g., Carroll Shelby Licensing, Inc. v. Halicki, No. 820-CV-01344-MCS-DFM, 2023 WL 16 2347391, at *4 (C.D. Cal. Jan. 30, 2023) (denying Rule 54(b) motion). 17 Judicial administration is an equally important reason to delay judgment and appeal until 18 the entire case is resolved. See Wood, 422 F.3d at 882–83 (“Duplication of proceedings and 19 overall delay in final disposition of the action implicate sound judicial administration.”). Because 20 Mr. Lawson’s claims are not “sufficiently divisible,” Curtiss-Wright, 446 U.S. at 7, judgment and 21 appeal will only conserve judicial resources if Grubhub prevails on its appeal. That is not a sound 22 basis for a Rule 54(b) judgment. See Tsyn, 2016 WL 1718139, at *3 (“The plaintiffs simply recast 23 [their summary judgment] disagreement in the language of Rule 54(b) and § 1292(b). If that 24 approach carried the day, then interlocutory appeal would not be ‘unusual’ but routine in every 25 case in which one side disagreed with a court’s dispositive order. (And is there any other kind of 26 case?)”). 27 In sum, Grubhub does not meet either requirement for entry of judgment under Rule 54(b). II. Interlocutory Appeal 1 28 U.S.C. § 1292(b) is another exception to the rule that only final orders are appealable. 2 “Section 1292(b) provides a mechanism by which litigants can bring an immediate appeal of a 3 non-final order upon the consent of both the district court and the court of appeals.” In re Cement 4 Antitrust Litig. (MDL No. 296), 673 F.2d 1020, 1025–26 (9th Cir. 1982) (en banc). 5 Section 1292(b) certification is appropriate if the order (1) “involves a controlling question 6 of law,” (2) “as to which there is substantial ground for difference of opinion,” and (3) “an 7 immediate appeal from the order may materially advance the ultimate termination of the 8 litigation.” 28 U.S.C. § 1292(b); see In re Cement, 673 F.2d at 1026. District courts have wide 9 discretion whether to certify. See Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 46 (1995). 10 Section 1292(b) is “applied sparingly,” only when “exceptional circumstances justify a departure 11 from the basic policy of postponing appellate review until after the entry of a final judgment.” In 12 re Cement, 673 F.2d at 1026–27 (cleaned up). 13 A. Controlling Question of Law 14 “A controlling question of law must be one of law—not fact—and its resolution must 15 materially affect the outcome of litigation in the district court.” ICTSI Or., Inc. v. Int’l Longshore 16 & Warehouse Union, 22 F.4th 1125, 1130 (9th Cir. 2022) (cleaned up). 17 Grubhub argues this Court’s orders created three “intra-circuit splits.” (Dkt. No. 317 at 8– 18 10.) The first issue is whether Mr. Lawson’s effective hourly rate calculation (for minimum wage 19 and overtime purposes) can account for his mileage expenses. (See Dkt. No. 313 at 28–30.) That 20 is a question of law. See, e.g., Sanchez v. Aerogroup Retail Holdings, Inc., No. 12-CV-05445- 21 LHK, 2013 WL 1942166, at *9–11 (N.D. Cal. May 8, 2013). But it is not controlling because Mr. 22 Lawson would recover some minimum wage damages even without accounting for mileage 23 expenses.2 Thus, resolution of this question of law would not materially affect the outcome of Mr. 24 Lawson’s minimum wage claim, expense reimbursement claim (which fails for different reasons), 25 26 2 The Court determined Mr. Lawson’s net pay using total pay less tips and Mr. Lawson’s mileage 27 expenses calculated according to the IRS rate. (Dkt. No. 313 at 30–31 & n.9.) If Mr. Lawson’s 1 or overtime claim (same). See In re Cement, 673 F.2d at 1027 (“Since an appellate decision that 2 recusal was improper could in no way materially affect the eventual outcome of the litigation, we 3 cannot view the question as controlling.”). 4 The second issue is whether Mr. Lawson’s time on-block, toggled available, and in- 5 network, but not performing deliveries, is compensable work time. (See Dkt. No. 313 at 22–27.) 6 That is a question of applying established law, see Frlekin v. Apple Inc., 8 Cal. 5th 1038, 1049–56 7 (2020), to the facts of Mr. Lawson’s work. The third issue is whether Mr. Lawson’s work was 8 outside the usual course of Grubhub’s business. (See Dkt. No. 313 at 8–17.) That is also a 9 question of applying established law, see Lawson II, 13 F.4th at 913–14, 916–17, to the facts of 10 Mr. Lawson’s work and Grubhub’s business. The Ninth Circuit confronted a similar issue in 11 ICTSI and concluded it was “a question of fact, not of law.” 22 F.4th at 1132 (cleaned up).

12 The dispute between the parties is not about whether primary—as opposed to secondary—employers can recover damages for violation 13 of § 158(b)(4)(B) (a question of law); rather the dispute is about whether ICTSI became a primary employer under the circumstances 14 of this case (a question of fact). . . . [S]uch question does not present a substantial ground for disagreement as to the question of law. 15 16 Id.; see SA Music LLC v. Apple, Inc., No. 3:20-CV-02146-WHO, 2022 WL 1814148, at *5 (N.D. 17 Cal. June 2, 2022) (“The plaintiffs have, consequently, not identified any true question of law, just 18 an application of a settled legal standard to particular facts.”); cf. Canela v. Costco Wholesale 19 Corp., No. 13-CV-03598-BLF, 2018 WL 3008532, at *1 (N.D. Cal. June 15, 2018) (“[T]he 20 Article III standing issue . . . is a purely legal question that does not depend on a material dispute 21 of fact.”). So too here. Grubhub’s second and third issues are applications of settled law to the 22 facts as the Court found them from the supplemented bench trial record. 23 In sum, Grubhub does not meet the first of three requirements to certify an interlocutory 24 appeal under Section 1292(b). See In re Cement, 673 F.2d at 1026. It is often true that reversal on 25 appeal would streamline the rest of the litigation, but we nevertheless have a strong policy against 26 piecemeal appeals. See Wood, 422 F.3d at 878. Rule 54(b) and Section 1292(b) require a party to 27 show more than its desire for a different result. 1 CONCLUSION 2 Grubhub’s motion is DENIED. The June 8, 2023 case management conference will be 3 held at 1:30 p.m. by Zoom video, rather than at 10:00 a.m. in person. 4 This Order disposes of Docket No. 317. 5 IT IS SO ORDERED. 6 Dated: May 30, 2023 7 8 ne JAYQUELINE SCOTT CORLEY 9 United States District Judge 10 11 12

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