Articles from October 2017

In early September, Judge Jeffrey S. White preliminarily approved a nearly $9 million settlement for couriers of Postmates Inc., the on-demand delivery service, bringing the parties one step closer to resolving the proposed class action that alleged that the company misclassified couriers as independent contractors and failed to pay them minimum wages. See Singer, et al. v. Postmates, Inc., Case No. 4:15-CV-01284-JSW (N.D. Cal. Sept. 1, 2017), Order Granting Plaintiff’s Motion for Preliminary Approval of Class Action Settlement (slip op. available here). The action is another in a recent spate of misclassification cases brought about by the “gig economy,” in which temporary, flexible jobs are commonplace and workers are often asked to sacrifice certain benefits for purported freedom from the traditional workplace.

On March 19, 2015, couriers across the country sued Postmates in the United States District Court, Northern District of California. In Singer, the plaintiff and other couriers alleged that, in treating them as independent contractors, Postmates violated the federal Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201, et seq., by failing to pay them minimum wage or overtime for all hours worked in excess of forty per week. The suit further alleged violations of  California’s labor statutes (minimum wage, wage statement, and expense reimbursement laws), the Private Attorneys General Act (“PAGA”), and New York overtime and minimum wage laws, as to couriers who made deliveries in California and New York and personally bore necessary business-related expenses and costs without reimbursement from Postmates.

Although classified as independent contractors by Postmates, the couriers argued they are actually employees, given that they are required to follow detailed requirements imposed on them by Postmates, are graded or evaluated by Postmates, and are subject to termination based on Postmates’ discretion and/or their failure to adhere to those requirements (such as rules regarding their conduct with customers, their timeliness in picking up items and delivering them to customers, and the accuracy of their orders). By being misclassified as independent contractors, Postmates’ couriers alleged they were not paid proper compensation for hours worked and were required to bear many of the expenses of their employment, including those for their vehicles and bicycles, gas, and phone and data plans, without reimbursement.

In recognizing that no California court has conclusively determined whether the gig workers are, in fact, employees or independent contractors, and that both parties faced substantial risks of further litigation, Judge White preliminarily approved the $8.75 million deal, which provides reimbursement for mileage and travel expenses to couriers who submit claims. The non-reversionary settlement also provides non-monetary relief whereby Postmates will modify the terms of its Independent Contractor Agreement to permit termination of couriers only for specified material breaches of the agreement, permit couriers to appeal contract terminations through a neutral arbitration process at Postmates’ expense, provide couriers access to accident insurance at negotiated group rates, and establish a forum for receiving feedback from couriers regarding proposed changes to its business practices. The proposed settlement class includes approximately 88,000 California couriers, 28,000 New York couriers, 3,000 couriers in Massachusetts, 8,000 couriers in Washington, D.C., and 107,000 couriers throughout the remainder of the country.

The Postmates settlement is one of other similar deals either already approved or currently being considered by judges presiding over misclassification suits brought by gig economy workers.[1] Recently, several state and federal agencies—including the Internal Revenue Service—have cracked down on companies claiming to use independent contractors who perform work like employees of the company. Despite pressure from public agencies and private actions intent on curbing corporate misuse of independent contractor models similar to Postmates’, companies will likely continue to pass operating costs onto workers in the gig economy until California courts definitively decide whether gig workers are employees or independent contractors.

[1] See, e.g., grocery delivery drivers (Casey Camp, et al. v. MapleBear, Inc., dba Instacart, Los Angeles County Superior Court, Case No. BC652216); rideshare drivers (Steven Price v. Uber Technologies, Inc., et al., Los Angeles County Superior Court, Case No. BC554512; Patrick Cotter, et al., v. Lyft, Inc., N.D. Cal., Case No. 3:13-cv-04065-VC); parcel delivery drivers (FedEx Ground Package System, Inc. Employment Practices Litigation, N.D. Ind., Case No. 3:05-md-00527); call center workers (Norman, et al., v. Dell Inc., et al., D. Ore., Case No. 07-cv-06028); and exotic dancers (Roe v. SFBSC Management, LLC, N.D. Cal., Case No. 14-cv-03616).

Authored by:
Ari Basser, Associate
CAPSTONE LAW APC

Last month, the Ninth Circuit Court of Appeals issued its definitive ruling in Robins v. Spokeo, Inc., the closely-watched saga of what constitutes “concrete injury” in the world of consumer privacy actions. No. 11-56843 (9th Cir. Aug. 15, 2017) (slip op. available here). While businesses were hopeful that the conservative-leaning U.S. Supreme Court would effectively gut consumer class actions when the case was heard earlier this year, instead, the Court punted on the key issue of whether a plaintiff can suffer concrete and particularized harm without any clear monetary damages, holding that Article III standing is not conferred upon a plaintiff simply by “alleging a bare procedural violation,” yet acknowledging that the required injury may be intangible.

In Robins’ case, personal data aggregator Spokeo posted false information about him online, concerning his marital status, employment status, and annual salary. The plaintiff sued Spokeo under the FCRA (Fair Credit Reporting Act), alleging the company willfully violated certain procedural requirements of the FCRA, resulting in an erroneous report that harmed his job prospects at a time when he was unemployed and, as a result, he suffered emotional distress. While the district court found that Spokeo likely committed a statutory violation of the FCRA, it dismissed the case, finding that the alleged harm to Robins (diminishing employment prospects, stress, and anxiety) was too attenuated to confer standing. On appeal, the Ninth Circuit reversed and remanded the case, only to be reversed on a narrow issue by the Supreme Court. While the Supreme Court found that the Ninth Circuit’s analysis addressed whether the injury alleged by the plaintiff was particularized as to him, the Court also noted that the panel had not devoted enough attention to whether the alleged injury was sufficiently concrete, and ordered the Ninth Circuit to reevaluate whether Robins’ harm met the “concreteness” standard laid out by the Court.

Luckily for consumer plaintiffs, the Ninth Circuit reinforced its earlier findings and determined that harm of the kind suffered by Robins is indeed concrete enough to confer Article III standing. First, it held that while a mere statutory violation is not sufficient for a plaintiff to show injury-in-fact, some statutory violations, alone, are enough to show concrete harm. Slip op. at 8-10. Second, the court found that the statutory provisions at issue were established to protect Robins’ and other consumers’ concrete interests (as opposed to only procedural rights) and that these violations of the FCRA actually harm or present a material risk of harm to those interests. Id. at 15-19. Although the court acknowledged that not every inaccuracy in a credit report, such as an incorrect zip code, would rise to the level of “real harm,” here, Robins had made specific allegations that his marital status, age, education/degrees, and wealth level were incorrectly reported, and that these inaccuracies caused actual harm to his employment prospects as he was unemployed at the time, as well as causing him anxiety and worry. Id. at 17-18. Finally, the court rejected Spokeo’s argument that the plaintiff’s alleged harm was too speculative to amount to a concrete injury. Id. at 19-20.

This ruling should be the last word in a case that has been court-hopping since 2010, and is expected to have wide-ranging impact on various types of statutory privacy litigation.

Authored by:
Robin Hall, Associate
CAPSTONE LAW APC