Supreme Court warns Ninth Circuit decision in Olson v. California puts constitutional rights in peril

Court declines to hear case brought by Uber drivers

On October 10, The Cullen Law Firm, PLLC, filed an amicus brief with the U.S. Supreme Court on behalf of the Owner-Operator Independent Drivers Association, Inc. (OOIDA), supporting the plaintiffs’ petition for review in Olson v. California. OOIDA explained that a recent Ninth Circuit decision threatens to weaken the already government-friendly Equal Protection Clause and allow governments to treat persons unfairly.

In Olson, app workers achieved a preliminary victory when a panel of Ninth Circuit judges reversed the dismissal of their case. But that victory was short-lived after the entire Ninth Circuit reheard the appeal and affirmed the trial court’s original dismissal. The plaintiffs petitioned the Supreme Court for review, citing a conflict among the federal appellate courts regarding the appropriate level of review for equal protection lawsuits.

Uber and Postmates workers challenge California’s worker classification law in court, alleging that the law’s exemptions for Wag! and TaskRabbit workers violate their right to equal protection under the law

In 2019, the California legislature enacted a new rigid worker classification law, changing the test controlling whether a worker is an employee subject to California’s employment laws (wage, unemployment, worker protections, etc.) or an independent contractor. Under AB 5’s “ABC” test, workers are presumed to be employees unless three requirements are satisfied. In its initial form and after later amendments, myriad exceptions removed various categories of workers from the law’s scope and subjected them to the previous (more flexible) standard (click here for CullenLaw’s analysis of AB 5).

One such exemption applied to workers for certain apps, but that exemption did not include Uber and Postmates workers, meaning the State classified Uber and Postmates workers under the ABC test (which meant they would almost certainly be classified as employees) and classified workers for exempted apps (like TaskRabbit and Wag!) under the previous standard (which could result in the workers being independent contractors).

The Olson plaintiffs sued the State, alleging that this unequal treatment lacks any rational basis in law or fact and violates the plaintiffs’ right to equal protection under the U.S. Constitution.

Courts must decide if a law distinguishes between people fairly and satisfies the Constitution’s guarantee of equal protection under the law

Governments routinely treat people differently based on various characteristics. For example, citizens under the age of 18 cannot vote, and citizens aged 18 or over can. Thus, although the 14th Amendment to the U.S. Constitution guarantees persons equal protection under the law, courts decide whether a particular law fairly distinguishes between like persons. When the law makes economic distinctions (as in worker classification), courts merely consider whether there is a potential or even theoretical “rational basis” for the challenged law. This government-friendly standard can be overcome if plaintiffs can show that the disparate treatment is, in fact, illogical, irrational, or unconnected to the law’s claimed justifications.

The Olson courts disagreed on whether AB 5’s app exemption violates equal protection

The federal trial court granted the government’s motion to dismiss the suit. Typically, when courts consider motions to dismiss, they accept the complaint’s allegations as true, resolve all reasonable inferences in favor of the plaintiffs, and decide if the lawsuit states a legal claim. Courts do not consider facts outside the complaint’s allegations at this stage. However, courts have struggled to apply this dismissal standard to equal protection claims that can be rejected based on theoretical justifications for the challenged laws (i.e., justifications that need not be supported with actual evidence).

Thus, although the Olson plaintiffs alleged facts demonstrating that the differential treatment was irrational—that there was no rational reason for treating the app workers differently—the court could conceive of circumstances that would provide a basis for treating these workers differently and rejected the claims. On appeal, a panel of Ninth Circuit judges disagreed, deciding that the plaintiffs did show the law lacked a rational basis. The full Ninth Circuit agreed to rehear the appeal, and the court affirmed the dismissal based on potential justifications for the law that the plaintiffs argued were based on facts outside their complaint. The plaintiffs asked the Supreme Court to review the case, arguing that courts deciding motions to dismiss should not consider these theoretical defenses when they rely on facts that are outside or contrary to the plaintiffs’ allegations.

OOIDA tells the Supreme Court to review Olson’s case and ensure that plaintiffs get their day in court

In October, OOIDA filed an amicus curiae (or “friend of the court”) brief supporting Olson’s petition. OOIDA explained that allowing courts to dismiss equal protection claims based on facts that contradict plaintiffs’ allegations opens the door to courts ignoring plaintiffs’ evidence through all stages of litigation. Although the government-friendly rational basis standard is a low bar to clear, equal protection case law requires courts to determine that the challenged law makes sense. Even if defendants or the court can conceive of would-be rational bases for a law, plaintiffs should be given the opportunity to introduce evidence that reality contradicts these claimed justifications.

For instance, in its own separate challenge to AB 5, OOIDA demonstrated that AB 5’s business-to-business exemption favors intrastate truckers over their interstate counterparts. Only intrastate truckers, who are not subject to the federal Truth-in-Leasing rules, can ever satisfy the exemption’s requirements and be classified under AB 5’s predecessor which permits independent leased owner-operators. Thus, the state made an AB 5 exemption available only to the group of persons it intended AB 5 to protect—California workers—but not persons it has little or no interest in protecting—interstate workers more likely to be from out of state. Such a contradiction is irrational.

On October 15, the Supreme Court denied Olson’s petition for review, leaving in place the Ninth Circuit’s rejection of the plaintiffs’ claims. OOIDA’s case remains pending in the Ninth Circuit. Learn more about OOIDA’s AB 5 challenge.

CullenLaw attorneys Paul D. Cullen, Jr. and Charles R. Stinson submitted the brief on behalf of OOIDA.

The complete docket, including the petition for review and the other briefs of amicus curiae can be found on the Supreme Court docket. For more information about AB 5, please contact info@cullenlaw.com.