479 F.Supp.3d 901
S.D. Cal.2020Background
- Plaintiffs are companies (data processors) and individual petition circulators (collectors) who sell or provide gathered voter-signatures; many contracts treat collectors as independent contractors.
- California enacted AB 5 (effective Jan 1, 2020), codifying the Dynamex “ABC” test statewide: a worker is an employee unless (A) free from control, (B) does work outside hiring entity’s usual course of business, and (C) is customarily engaged in an independent trade.
- AB 5 applies across the Labor Code and Unemployment Insurance Code, carries criminal and civil penalties for violations, but includes statutory exemptions for certain occupations.
- Plaintiffs challenge AB 5 on multiple constitutional grounds (Equal Protection, Due Process, First Amendment, Ninth Amendment/Baby Ninth, California Inalienable Rights), Contracts Clause claims, and seek declaratory and injunctive relief; suit named State of California and AG Becerra; defendants moved to dismiss.
- The district court granted the State’s motion to dismiss in full but gave plaintiffs 20 days leave to amend, holding most claims subject to rational-basis review and finding plaintiffs’ allegations inadequate or speculative on ripeness/irreparable harm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Level of scrutiny under Equal Protection | AB 5 denies collectors the right to pursue chosen lawful occupation; merits strict scrutiny | No suspect class or fundamental right implicated; rational-basis review applies and AB 5 furthers legitimate state interest | Rational-basis review applies; plaintiffs’ equal protection claims dismissed |
| Rational-basis review: exemptions allegedly arbitrary | Exemptions (e.g., direct sales, newspaper carriers) irrationally favor some industries and evidence animus | Legislature reasonably tailored exemptions based on prior law, licensure, bargaining power, nature of work | Court upholds classifications under rational-basis review |
| Substantive due process (vocational liberty) | Reclassification would effectively prohibit collectors’ chosen method of work (complete prohibition) | Vocational liberty is not fundamental; only reasonable regulation required; AB 5 leaves pathways (ABC or exemptions) | No fundamental right violated; due process claims dismissed |
| First Amendment — petition-circulation/speech | AB 5 burdens core political speech (petition circulation) and will chill initiative advocacy | AB 5 is a generally applicable employment classification law that does not regulate expressive conduct or single out petitioners | First Amendment claims dismissed (no tight nexus or inherently expressive regulation like in Buckley) |
| Ninth Amendment / California Baby Ninth / Inalienable Rights | These provisions protect right to work as independent contractors | Ninth/Baby Ninth and inalienable-right clauses do not create a standalone private right of action | Claims dismissed as non‑justiciable sources of independent rights |
| Contracts Clause | AB 5 would substantially impair existing contracts between processors and collectors | Any impairment is speculative, foreseeable after Dynamex, and the statute serves legitimate public purpose | No substantial impairment shown; Contracts Clause claims dismissed |
| Declaratory relief / ripeness | Plaintiffs seek declaration that individual collectors are independent contractors under ABC now | No present enforcement or imminent injury; relief would be speculative and courts should avoid resolving unsettled state-law questions | Court declines to issue declaratory judgment as unripe/precatory |
| Injunctive relief | Plaintiffs seek preliminary/permanent injunction to prevent enforcement | Plaintiffs unlikely to succeed on merits, no showing of irreparable harm; public interest favors protecting workers | Injunctive relief denied |
| State immunity (Eleventh Amendment) | Suing State of California and AG Becerra; equitable relief available against state officials | State of California is immune from suit in federal court; AG as official-capacity defendant is proper for prospective relief | Court notes State is immune; AG Becerra may be sued in official capacity for prospective relief |
Key Cases Cited
- Dynamex Operations W. v. Superior Court, 4 Cal.5th 903 (Cal. 2018) (established ABC test for employee status)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (conclusory allegations insufficient to survive Rule 12(b)(6))
- City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432 (1985) (equal protection standards and rational-basis review discussion)
- Buckley v. Am. Constitutional Law Found., Inc., 525 U.S. 182 (1999) (regulation of petition circulators implicated First Amendment)
- Meyer v. Grant, 486 U.S. 414 (1988) (initiative petition circulation is core political speech)
- FCC v. Beach Commc’ns, 508 U.S. 307 (1993) (rational-basis review: challenger must negate every conceivable basis)
- Interpipe Contracting, Inc. v. Becerra, 898 F.3d 879 (9th Cir. 2018) (generally applicable wage laws do not necessarily bear a tight nexus to First Amendment rights)
- Beeman v. Anthem Prescription Mgmt., LLC, 58 Cal.4th 329 (2013) (California Constitution speech claims still subject to deference in economic regulation)
- Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983) (Contracts Clause test and foreseeability of regulatory changes)
- Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985) (state police powers to regulate employment relationships)
- Seminole Tribe of Fla. v. Florida, 517 U.S. 44 (1996) (limits on suits against states; Eleventh Amendment immunity)