Lydia Olson v. State of California ( 2023 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LYDIA OLSON; MIGUEL PEREZ; No. 21-55757
POSTMATES, INC., (Successor
Postmates LLC); UBER D.C. No.
TECHNOLOGIES, INC., 2:19-cv-10956-
Plaintiffs-Appellants, DMG-RAO
v.
OPINION
STATE OF CALIFORNIA; ROB
BONTA, * in his capacity as Attorney
General of the State of California,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Dolly M. Gee, District Judge, Presiding
Argued and Submitted July 13, 2022
San Francisco, California
Filed March 17, 2023
*
Rob Bonta is substituted for his predecessor Xavier Becerra, former
Attorney General of the State of California. See Fed. R. App. P.
43(c)(2).
2 OLSON V. STATE OF CALIFORNIA
Before: Johnnie B. Rawlinson and Danielle J. Forrest,
Circuit Judges, and Morrison C. England, Jr.,** Senior
District Judge.
Opinion by Judge Rawlinson
SUMMARY ***
Civil Rights
The panel affirmed in part and reversed in part district
court orders dismissing Plaintiffs’ Second Amended
Complaint and denying Plaintiffs’ motion for a preliminary
injunction, and remanded, in an action seeking to enjoin the
State of California and the California Attorney General from
enforcing California Assembly Bill 5 (“A.B. 5”), as
amended by California Assembly Bills 170 and 2257.
A.B. 5, as amended, codified the “ABC test” adopted by
the Supreme Court of California in Dynamex Operations
West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903(2018), to categorize workers as employees or independent
contractors for the purposes of California wage orders. A.B.
5, as amended, however, incorporated numerous exemptions
into its provisions.
**
The Honorable Morrison C. England, Jr., Senior United States District
Judge for the Eastern District of California, sitting by designation.
***
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
OLSON V. STATE OF CALIFORNIA 3
The panel first held that, even under the fairly forgiving
rational basis review, Plaintiffs plausibly alleged that A.B.
5, as amended, violated the Equal Protection Clause for
those engaged in app-based ride-hailing and delivery
services. Thus, Plaintiffs plausibly alleged that the primary
impetus for the enactment of A.B. 5 was the disfavor with
which the architect of the legislation viewed Uber,
Postmates, and similar gig-based business
models. Additionally, Plaintiffs plausibly alleged that their
exclusion from the wide-ranging exemptions, including for
comparable app-based gig companies, could be attributed to
animus rather than reason. The district court therefore erred
by dismissing Plaintiffs’ equal protection claim.
The panel held that the district court correctly dismissed
Plaintiffs’ due process claims because Plaintiffs failed to
plausibly allege that A.B. 5, as amended, completely
prohibited them from exercising their “right to engage in a
calling.” In addition, Plaintiffs’ allegations did not plausibly
allege that A.B. 5, as amended, would bar plaintiffs Olson
and Perez from continuing their work as “business owners in
the sharing economy” with network companies that were
exempted from A.B. 5, as amended.
The panel held that A.B. 5, as amended, did not violate
the Contract Clause because it neither interfered with
Plaintiffs’ reasonable expectations nor prevented them from
safeguarding or reinstating their rights. Plaintiffs’ Bill of
Attainder claims likewise failed because Plaintiffs did not
plausibly allege that A.B. 5, as amended, inflicted
punishment on them.
Addressing the district court’s denial of Plaintiffs’
motion for a preliminary injunction, the panel noted that the
district court’s order was based on allegations contained in
4 OLSON V. STATE OF CALIFORNIA
the Initial Complaint, which did not include Plaintiffs’
allegations regarding facts—namely the passage of A.B.
2257 and Proposition 22—that did not exist when the Initial
Complaint was filed. The panel therefore remanded for the
district court to reconsider Plaintiffs’ motion for a
preliminary injunction, considering the new allegations
contained in the Second Amended Complaint.
COUNSEL
Theane Evangelis (argued), Blaine H. Evanson, Heather L.
Richardson, Dhananjay S. Manthripragada, and Alexander
N. Harris, Gibson Dunn & Crutcher LLP, Los Angeles,
California; for Plaintiffs-Appellants.
Jose A. Zelidon-Zepeda (argued), Deputy Attorney General;
Mark Beckington and Tamar Pachter, Supervising Deputy
Attorneys General, Thomas S. Patterson, Senior Assistant
Attorney General; Rob Bonta, Attorney General of
California; Office of the Attorney General, San Francisco,
California; for Defendant-Appellee.
Scott A. Kronland and Stacey M. Leyton, Altshuler Berzon
LLP, San Francisco, California, for Amici Curiae
International Brotherhood of Teamsters, Service Employees
International Union California State Council, and United
Food and Commercial Workers Union Western States
Council.
OLSON V. STATE OF CALIFORNIA 5
OPINION
RAWLINSON, Circuit Judge:
Lydia Olson (Olson), Miguel Perez (Perez), Uber, Inc.
(Uber) and Postmates, Inc. (Postmates, and collectively
Plaintiffs) appeal the district court’s orders denying their
motion for a preliminary injunction and dismissing their
Second Amended Complaint.
Plaintiffs filed this action to enjoin the State of California
and the Attorney General of California (Defendants), from
enforcing California Assembly Bill 5, 2019 Cal. Stats. Ch.
296 (A.B. 5), as amended by California Assembly Bill 170,
2019 Cal. Stats. Ch. 415 (A.B. 170) and California Assembly
Bill 2257, 2020 Cal. Stats. Ch. 38 (A.B. 2257, and
collectively A.B. 5, as amended), against them. A.B. 5, as
amended, codified the “ABC test” adopted by the Supreme
Court of California in Dynamex Operations West, Inc. v.
Superior Court of Los Angeles, 4 Cal. 5th 903 (2018). 1 A.B.
5, as amended, however, incorporated numerous exemptions
into its provisions.
Plaintiffs’ Second Amended Complaint requested an
injunction on the grounds that—as applied to Plaintiffs—
A.B. 5, as amended, violates: the Equal Protection Clauses,
the Due Process Clauses, the Contract Clauses, and the Bill
of Attainder Clauses of the United States and California
Constitutions.
1
The effect of the “ABC test” was to include more workers in the
category of “employee” as opposed to that of “independent contractor.”
Dynamex, 4 Cal. 5th at 964.
6 OLSON V. STATE OF CALIFORNIA
This case consolidates Plaintiffs’ appeals of: 1) the
district court’s order granting Defendants’ motion to dismiss
Plaintiffs’ Second Amended Complaint; and 2) the district
court’s order denying Plaintiffs’ motion for a preliminary
injunction.
We have jurisdiction under 28 U.S.C. § 1291.
Reviewing de novo, we REVERSE the district court’s
dismissal of Plaintiffs’ equal protection claims, but AFFIRM
the dismissal of the due process, contract clause, and bill of
attainder claims. We REMAND the district court’s order
denying Plaintiffs’ motion for a preliminary injunction for
reconsideration consistent with this opinion.
I. Background
A. The Dynamex Decision
In 2018, the Supreme Court of California adopted the
aforementioned “ABC test” to categorize workers as
employees or independent contractors for the purposes of
California wage orders. Dynamex, 4 Cal. 5th at 957. Under
the ABC test, workers are presumed to be employees, and
may only be classified as independent contractors if the
hiring entity demonstrates:
(A) that the worker is free from the control
and direction of the hiring entity in
connection with the performance of the work,
both under the contract for the performance
of the work and in fact; and (B) that the
worker performs work that is outside the
usual course of the hiring entity’s business;
and (C) that the worker is customarily
engaged in an independently established
OLSON V. STATE OF CALIFORNIA 7
trade, occupation, or business of the same
nature as the work performed.
Id. (citations omitted) (emphases in the original). 2
B. Statutory Background
In 2019, the California Legislature passed A.B. 5. The
expressed intent of the Legislature in enacting A.B. 5 was to:
ensure workers who are currently exploited
by being misclassified as independent
contractors instead of recognized as
employees have the basic rights and
protections they deserve under the law,
including a minimum wage, workers’
compensation if they are injured on the job,
unemployment insurance, paid sick leave,
and paid family leave.
A.B. 5 § 1(e). To effectuate its expressed intent, A.B. 5
codified Dynamex, see id., and its presumption that “a person
providing labor or services for remuneration shall be
considered an employee rather than an independent
contractor, unless the hiring entity” makes the requisite
showing under the ABC test. A.B. 5 § 2(a)(1); see also
Dynamex, 4 Cal. 5th at 967. A.B. 5 also expanded
Dynamex’s application beyond wage orders to California’s
Labor and Unemployment Insurance Codes. See id.2
Prior to Dynamex, California courts primarily determined whether a
worker was an employee or an independent contractor by applying the
multi-factor balancing test adopted in S. G. Borello & Sons, Inc. v.
Department of Industrial Relations, 48 Cal. 3d 341 (1989). See
Dynamex, 4 Cal. 5th at 931-32.
8 OLSON V. STATE OF CALIFORNIA
However, A.B. 5 exempted a broad swath of workers from
the Dynamex presumption. See id. § 3(b). These statutory
exemptions included: California licensed insurance
businesses or individuals, physicians and surgeons, dentists,
podiatrists, psychologists, veterinarians, lawyers, architects,
engineers, private investigators and accountants; registered
securities broker-dealers and investment advisers; direct
sales salespersons; commercial fishermen working on
American vessels for a limited period; marketers; human
resources administrators; travel agents; graphic designers;
grant writers; fine artists; payment processing agents; certain
still photographers or photo journalists; freelance writers,
editors, or cartoonists; certain licensed estheticians,
electrogists, manicurists, barbers or cosmetologists; real
estate licensees; repossession agents; contracting parties in
business-to-business relationships; contractors and
subcontractors; and referral agencies and their service
providers. See A.B. 5 § 2. A.B. 5 also left open the
possibility of court-created exemptions. See id. § 2(a)(3).
Within a year of its enactment, A.B. 5 was amended by
A.B. 170 and A.B. 2257. Both bills exempted even more
workers from the Dynamex presumption. A.B. 170 added
exemptions for “[a] newspaper distributor working under
contract with a newspaper publisher . . . and a newspaper
carrier working under contract either with a newspaper
publisher or newspaper distributor.” A.B. 170 § 1(b)(7).
A.B. 2257 added exemptions for recording artists;
songwriters, lyricists, composers, and proofers; managers of
recording artists; record producers and directors; musical
engineers and mixers; vocalists; musicians engaged in the
creation of sound recordings; photographers working on
recording photo shoots, album covers, and other press and
publicity purposes; and independent radio promoters. See
OLSON V. STATE OF CALIFORNIA 9
A.B. 2257 § 2, 2780. A.B. 2257 also reduced application of
the existing exemption for referral agencies. See id., § 2,
2777.
C. Factual Background
It is undisputed that the enactment of A.B. 5 was largely
driven by a perceived need to curb reported abuses in the gig
economy, particularly rideshare companies and analogous
platforms. The sponsor of A.B. 5, California
Assemblywoman Lorena Gonzalez, published a Washington
Post Op-Ed in which she proclaimed that A.B. 5 would
“guarantee . . . workers the normal rights and privileges—
and benefits—enjoyed by most employees” that “‘gig’
companies such as Uber, Lyft, DoorDash, Handy and
others” do not provide to “‘gig’ workers.” See Lorena
Gonzalez Opinion, The Gig Economy Has Costs. We can No
Longer Ignore Them, Wash. Post (Sept. 11, 2019). 3
According to a December 2019 Los Angeles Times Article,
Assemblywoman Gonzalez was “open to changes in [A.B.
5] next year, including an exemption for musicians — but
not for app-based ride-hailing and delivery giants.” Margot
Roosevelt, New Labor Laws Are Coming to California.
What’s Changing in Your Workplace? (New Labor Laws),
L.A. TIMES (Dec. 29, 2019). 4 California Assemblyman
Anthony Rendon tweeted, “[t]he gig economy is nothing
new. It’s a continuation of hundreds of years of corporations
trying to screw over workers. With [A.B. 5], we’re in a
position to do something about that.” Anthony Rendon,
3
https://www.washingtonpost.com/opinions/2019/09/11/gig-economy-
has- costs-we-can-no-longer-ignore-them/
4
https://www.latimes.com/business/story/2019-12-29/California-
employment-laws-2020-ab5-minimum-wage
10 OLSON V. STATE OF CALIFORNIA
@Rendon63rd, TWITTER (July 10, 2019, 4:40 PM).5
Addressing A.B. 5, Assemblywoman Buffy Wicks tweeted,
“I believe all workers should benefit from the hard-fought
protections won by unions — just because your employer
uses a smartphone app, doesn’t mean they should be able to
misclassify you as an independent contractor.” Buffy
Wicks, @BuffyWicks, TWITTER (Sept. 7, 2019, 6:57 AM). 6
D. Plaintiffs
Postmates is “a network company that operates an online
marketplace and mobile platform connecting local
merchants, consumers, and independent couriers to facilitate
the purchase, fulfillment, and, when applicable, local
delivery of anything from takeout to grocery goods from
merchants to the consumers.” Consumers may request
delivery from local merchants (including restaurants and
grocery stores) through Postmates’ Mobile Application
(Postmates’ App). When such a request is made, a nearby
courier will receive a notification and “can choose whether
to accept the consumer’s offer to pick up and complete the
requested delivery.”
To serve as a courier on Postmates’ App, an individual
must execute a “Fleet Agreement” to establish the individual
and Postmates’ relationship as independent contractor and
principal (rather than employee and employer). Couriers on
Postmates’ App may use the platform “as much or as little
as he or she wants—there is no set schedule, minimum-hours
requirement, or minimum-delivery requirement,” and
5
https://twitter.com/Rendon63rd/status/1149101100928159744
6
https://twitter.com/BuffyWicks/status/1170335312758706177
OLSON V. STATE OF CALIFORNIA 11
couriers are free to choose whether to “accept, reject, or
ignore” delivery requests.
Perez uses Postmates’ App to “run his own delivery
business.” He “values the flexibility of working for
himself,” and does not want to work as “someone else’s
employee again.”
Uber is also a network company that operates a digital
marketplace through its own mobile application-based
platforms (Uber Apps). Uber uses its Uber apps to “connect
individuals in need of goods or services with those willing
to provide them.” Uber’s most popular marketplace is
housed on two distinct apps: the Uber Rider App, which
allows riders to “connect with available transportation
providers based on their location” and the Uber Driver App,
which, in conjunction with the Uber Rider App, connects
available app-based drivers to those requesting rides. Prior
to utilizing the Uber Driver App, a driver must “execute a
‘Platform Access Agreement,’ which provides, in its very
first section: ‘The relationship between the parties is solely
as independent enterprises’ and ‘[t]his is not an employment
agreement and you are not an employee.’” As with
Postmates, a driver is free to use the Uber Driver App “as
much or as little as he or she wants—there is no set schedule,
minimum-hours requirement, or minimum-ride or
minimum-delivery requirement.” Drivers provide and
maintain their own equipment.
Olson is a California-based driver who “uses the Uber
platform to get leads for passenger requests to transport
passengers in the Sacramento and San Francisco Bay areas.”
Olson would be unable to work for Uber if she were to be
reclassified as an employee under A.B. 5 because she
depends on “the flexibility that comes with being an
12 OLSON V. STATE OF CALIFORNIA
independent service provider,” as she serves as her
husband’s primary caretaker.
E. Procedural History
1. The Initial Complaint and Motion for a
Preliminary Injunction.
Plaintiffs jointly filed a complaint on December 30, 2019
(the Initial Complaint), seeking declaratory, injunctive and
other relief based on the unconstitutionality of A.B. 5.
Plaintiffs also filed a motion for a preliminary injunction in
connection with their claims based on the denial of their
rights under the Equal Protection, Due Process, and Contract
Clauses. In support of their motion, Plaintiffs and their amici
filed several declarations, including: declarations from
Patricia Cartes Andres, Postmates’ Director of Trust and
Safety and Insurance Operations, and Brad Rosenthal,
Uber’s Director of Strategic Operational Initiatives,
regarding the companies’ respective business models;
declarations from drivers who use the Uber Drivers App, and
couriers who use the Postmates App, including Olson and
Perez; and a declaration and expert report from economist
Justin McCrary. Plaintiffs also provided tweets from
Assemblywoman Gonzalez, the principal sponsor and
proponent of A.B. 5, discussing A.B. 5 and Uber; 7 articles
and reports concerning the anticipated effect A.B. 5 would
have on the “gig economy”; and testimonials from
Californians negatively affected by A.B. 5.
The district court denied Plaintiffs’ motion for
preliminary injunctive relief. See Olson v. California, No.
7
One example was a tweet directed at Assemblywoman Gonzalez
reminding her that A.B. 5 was “aimed at Uber/Lyft.”
OLSON V. STATE OF CALIFORNIA 13
CV-1910956-DMG (RAOx), 2020 WL 905572 (C.D. Cal.
Feb. 10, 2020) (Olson I). The district court noted that for a
plaintiff to succeed on a motion for a preliminary injunction,
the plaintiff must show that “(1) she is likely to succeed on
the merits; (2) she is likely to suffer irreparable harm in the
absence of preliminary relief; (3) the balance of equities tips
in her favor; and (4) an injunction is in the public interest.”
Id. at *4 (citing Winter v. Nat. Res. Def. Council, Inc., 555
U.S. 7, 20 (2008)).
Beginning with the likelihood of success, the district
court determined that Plaintiffs were unlikely to succeed on
the merits of their claims and failed to raise “sufficiently
serious questions” on the merits. Id. at *5.
The district court specifically found that A.B. 5 was
related to a legitimate state interest and did not target gig
economy companies in violation of their equal protections
rights. See id. at *5. The district court rejected Plaintiffs’
argument that A.B. 5 does not rationally further the
government’s interest in the proper classification, given its
numerous exemptions. See id. at *6. Rather, the district
court concluded that A.B. 5’s exemptions were supported by
rational explanations. See id. at *8. The district court also
rejected Plaintiffs’ argument that the exemptions contained
in A.B. 5 could only be explained by improper animus
against gig companies because: (1) the “expansive language
of the statute” negated that argument; (2) discrimination
cannot be proven by simply pointing to lobbying efforts,
which are “constitutionally protected”; and (3) “reform may
take one step at a time,” so the refusal to give an exemption
to gig companies was not, in and of itself, improper. Id. at
*8 (citations omitted). Although the district court conceded
that “the record contains some evidence that [A.B.] 5
targeted [Uber, Postmates] and other gig economy
14 OLSON V. STATE OF CALIFORNIA
companies, and that some lawmakers’ statements
specifically complained about Uber,” it found that the
evidence did not rise to the level of demonstrating “an Equal
Protection violation where the statute addresses legitimate
concerns of deleterious misclassification of workers in many
industries, not just the gig economy.” Id. at *9.
Next, the district court found that A.B. 5 did not deprive
gig workers of the right to pursue a career, in violation of
due process. See id. at *10. The district court reasoned that
for a statute to infringe on a plaintiff’s “vocational liberty
interest,” it must completely prohibit a plaintiff from
engaging in a calling. Id. The district court concluded that
A.B. 5 was not a complete prohibition on the right to pursue
a calling because (1) Uber and Postmates insist that their
drivers are independent contractors even under the ABC test;
(2) Olson and Perez could be independent contractors if they
meet the ABC test or fall under an exemption, such as the
“referral agency” exemption; and (3) even if Olson and
Perez are reclassified as employees, they can still drive for
Uber and Postmates so long as those companies
“compensate them properly and allow them to have flexible
work schedules.” Id.
Finally, the district court found that A.B. 5 did not
unconstitutionally impair Plaintiffs’ contracts. See id. at
*11–13. The district court again pointed to Uber and
Postmates’ position that A.B. 5 did not require them to
reclassify their drivers, and thus “their contractual
relationships with drivers are not at all impaired, much less
substantially impaired.” Id. at *11. The district court further
concluded that “Plaintiffs reasonably should have expected
that the terms setting forth a driver’s contractor status were
not independently determinative of employment
classification,” and thus, should have foreseen that their
OLSON V. STATE OF CALIFORNIA 15
contracts could have been altered by laws like A.B. 5. Id. at
*11–12. The district court also noted that even if A.B. 5
substantially impaired Plaintiffs’ contracts, Plaintiffs are
unlikely to succeed on the merits of their contract clause
claims because they failed to show “that [A.B.] 5 does not
serve a significant and legitimate public purpose.” Id. at
*12.
On the irreparable harm element, the district court
conceded that Uber and Postmates “established some
measure of irreparable harm stemming from threatened
municipal enforcement actions,” but ultimately found that
the harm was mitigated by the possibility of “flexibility and
freedom” that could be offered to drivers as employees. Id.
at *14. The district court considered any potential harm
stemming from business restructuring and unrecoverable
expenditures “speculative” because Uber and Postmates
maintained that the ABC test does not apply to them. Id.
The district court determined that Olson and Perez were not
subject to the same enforcement actions as Uber and
Postmates, and that their alleged “unrecoverable financial
losses” and loss of “customer goodwill, freedom, financial
stability, and work satisfaction” were speculative in light of
Uber’s and Postmates’s position that A.B. 5 does not apply
to them. Id.
Addressing the remaining two preliminary injunction
elements—balancing of the equities and public interest—the
district court found that “the State’s interest in applying
[A.B.] 5 to [Uber and Postmates] and potentially hundreds
of thousands of California workers outweighs Plaintiffs’ fear
of being made to abide by the law.” Id. at *16. The district
court acknowledged Olson’s, Perez’s and amici’s contention
“that being classified as employees would be financially
devastating and upend their schedules and expectations.” Id.
16 OLSON V. STATE OF CALIFORNIA
The district court nonetheless also pointed to evidence from
Plaintiffs’ own expert that “‘a majority of workers do not
value scheduling flexibility’ and only a ‘substantial share’—
by inference, less than a majority—‘are willing to give up a
large share of their earnings to avoid employer discretion in
setting hours.’” Id. Accordingly, the district court declined
to “second guess the Legislature’s choice to enact a law that
seeks to uplift the conditions of the majority of non-exempt
low-income workers rather than preserve the status quo for
the smaller subset of workers who enjoy independent
contractor status.” Id.
Plaintiffs appealed this decision and we heard argument
in that case on November 18, 2020. However, on November
3, 2020, shortly before argument, Proposition 22 (Prop. 22)
was adopted through California’s ballot initiative process.
The initiative was aimed at protecting “the basic legal right
of Californians to choose to work as independent contractors
with rideshare and delivery network companies throughout
the state” from “recent legislation [that] has threatened to
take away the flexible work opportunities of hundreds of
thousands of Californians, potentially forcing them into set
shifts and mandatory hours, taking away their ability to make
their own decisions about the jobs they take and the hours
they work.” To effectuate this protection, Prop. 22 classified
app-based drivers as independent contractors “and not as []
employee[s] or agent[s] with respect to the app-based
driver’s relationship with a network company,”
“[n]otwithstanding any other provision of law.”
Given the then-recent passage of Prop. 22, we requested
a joint supplemental brief and status report from the parties
addressing: whether Prop. 22 mooted the appeal; the status
of any enforcement actions pending against Plaintiffs that
might be affected by the passage of Prop. 22; any pending
OLSON V. STATE OF CALIFORNIA 17
legal challenges to Prop. 22; the prospect of future
enforcement actions against Plaintiffs under A.B. 5; and any
other relevant pending matter or information. The Joint
Supplemental Brief was filed on December 10, 2020. In the
brief, the parties agreed that the appeal was not mooted by
the passage of Prop. 22.
2. The Second Amended Complaint and
Defendant’s Motion to Dismiss.
Shortly before we heard argument on Plaintiffs’ appeal
of the district court’s order denying their motion for a
preliminary injunction, Plaintiffs filed their Second
Amended Complaint. 8 The Second Amended Complaint
updated Plaintiffs’ original claims to incorporate the
amendments to A.B. 5 made by A.B. 2257. It alleged that
A.B. 5, as amended, violates state and federal Equal
Protection Clauses, Due Process Clauses, Contract Clauses,
and Bill of Attainder Clauses.
Defendants moved to dismiss Plaintiffs’ Second
Amended Complaint for failure to state a claim on which
relief could be granted, and the district court granted
Defendant’s motion in its entirety, with prejudice. See Olson
II, 2021 WL 3474015 at *10.
8
Plaintiffs’ First Amended Complaint was dismissed by the district court
with leave to amend its Equal Protection, Due Process, and Contracts
Clauses claims. Although the district court incorporated this order by
reference in its order dismissing the Second Amended Complaint,
Plaintiffs do not independently challenge dismissal of the First Amended
Complaint. See Olson v. Bonta, No. CV-1910956-DMG (RAOx), 2021
WL 3474015 at *1 (C.D. Cal. July 16, 2021) (Olson II).
18 OLSON V. STATE OF CALIFORNIA
a. Equal Protection Claims
The district court dismissed Plaintiffs’ Equal Protection
claims after concluding that A.B. 5, as amended, is
“rationally related to [California’s] interest in protecting
workers.” Id. at *2. The district court incorporated by
reference its previous dismissal of Plaintiffs’ Equal
Protection claims, as pled in the First Amended Complaint.
See id. The district court then addressed “four categories of
new factual allegations” in the Second Amended Complaint:
“(1) [A.B.] 5 bill sponsor Assemblywoman Lorena
Gonzalez’s comments about exempting the work
relationships of newspaper workers under [A.B.] 170; (2)
possible exemptions of the work relationships of gig
economy companies TaskRabbit and Wag! under [A.B.] 5;
(3) Assemblywoman Gonzalez’s animus toward Uber; and
(4) the policy pronouncements of Prop 22.” Id. at *3(emphasis in the original).
The district court rejected Plaintiffs’ allegations that the
one-year delay in the effective date of A.B. 5 for newspaper
distributors lacked a reasonable explanation. Id. The district
court reasoned that Assemblywoman Gonzalez’s statement
that “newspapers have lost nearly every case brought by
carriers under [Borello],” implied that “even under the old
Borello multifactor standard for determining employment
status, newspaper workers have been able to show that they
are properly classified as employees, not contractors.” Id.(citations and internal quotation marks omitted). Thus, the
district court concluded, the one-year exemption for
newspaper distributors and carriers, “where newspaper
workers arguably were already protected even under the old
Borello test, does not undermine the rationality of a
legislative scheme aimed at remedying misclassification in
industries not satisfactorily covered by Borello.” Id.OLSON V. STATE OF CALIFORNIA 19
(emphasis in the original). The district court also noted that
the newspaper industry faced idiosyncratic concerns such
that the Legislature concluded it would be “desirable to give
newspaper publishers more time to address misclassification
concerns.” Id.Second, the district court rejected Plaintiffs’ allegations
that the exemption of TaskRabbit and Wag! from the
mandates of A.B. 5, as amended (without similarly
exempting Plaintiffs) demonstrates that the bill lacks a
rational basis. Id. at *4. The district court concluded that
Plaintiffs’ allegations that Uber and Postmates’ business
models are “nearly identical” to those of TaskRabbit and
Wag!, id., suggested that A.B. 5, as amended, “did not
arbitrarily target app-based network companies,” rather than
supported Plaintiffs’ contention that this disparate treatment
“undercuts the State’s own rational basis” argument. Id.(citation and alterations omitted) (emphasis in the original).
The district court found the California Legislature’s decision
to exempt some app-based referral agencies but not others,
based on the services the referral agencies provide, to be a
“deliberate choice” that was consistent with the legislative
history of A.B. 5, as amended. Id. The district court
reasoned that there are “rational differences between
exempted errand-running and dog-walking and non-
exempted passenger and delivery driving,” such that any
disparate treatment on this basis does not give rise to an
equal protection violation. Id. at *5.
The district court was unpersuaded by Plaintiffs’
allegations that statements made by Assemblywoman
Gonzalez evidenced an irrational animus against them. See
id. at *6. The district court concluded that Plaintiffs failed
to demonstrate that they were a “politically unpopular
group” for the purposes of an equal protection analysis. Id.20 OLSON V. STATE OF CALIFORNIA
It further noted that “even if the [California] Legislature
sought to apply and then enforce the ABC test solely against
[Uber and Postmates], legislators are entitled to identify ‘the
phase of the problem’ of misclassification ‘which seems the
most acute to the legislative mind.’” Id. (citation omitted).
Accordingly, the district court concluded that “Plaintiffs
cannot show that the statute serves no legitimate
governmental purpose and that impermissible animus
toward an unpopular group prompted the statute’s
enactment.” Id. (citation, alteration, and internal quotation
marks omitted) (emphasis in the original)
Third and finally, the district court considered Plaintiffs’
allegations that the passage of Prop. 22 “further establishes
the irrationality of A.B. 5.” Id. (citation omitted). The
district court opined that “it is not clear that California
voters’ disapproval of [A.B.] 5 by voting for Prop 22
translates to a finding that [A.B.] 5 is irrational and thus
unconstitutional.” Id.b. Due Process claims
In dismissing the due process claims, the district court
relied on its previous rational basis analysis. See id. at *7.
The district court also reiterated that Plaintiffs failed to
plausibly allege that A.B. 5 was “a complete prohibition on
[Olson and Perez’s] ability to pursue any profession.” Id.(citation omitted). The district court noted that A.B. 5, as
amended, and the ABC test “permit anyone to remain an
independent contractor if their work relationship meets the
ABC test’s requirements.” Id. The district court added that,
even if Plaintiffs established that Olson and Perez’s desire to
remain independent contractors is its own “calling or
profession” their due process claims fail because A.B. 5
“conceivably furthers [California’s] legitimate interest in
OLSON V. STATE OF CALIFORNIA 21
preventing misclassification of workers in a wide swath of
industries.” Id.c. Contract Clause Claims
The district court observed that Contracts Clause claims
“involve a three-step inquiry.” Id. First, courts consider
“whether the state law has, in fact, operated as a substantial
impairment of a contractual relationship.” Id. Next, courts
consider “whether the state has a significant and legitimate
public purpose behind the law.” Id. (alteration and internal
quotation marks omitted). Finally, courts consider “whether
the adjustment of the rights and responsibilities of
contracting parties is based upon reasonable conditions and
is of a character appropriate to the public purpose justifying
the legislation’s adoption.” Id. (citation and alteration
omitted).
The district court began and ended its analysis at the first
step, see id., finding that Plaintiffs failed to plausibly allege
that A.B. 5 substantially impaired their contracts under
California law. See id. In the alternative, the district court
concluded that even if Plaintiffs had plausibly alleged
substantial impairment, their contract clause claims fail at
the third step because California has the authority “to
regulate employment relationship[s],” thereby satisfying
“the public purpose test” applied when assessing a contracts
clause challenge. Id. at *8.
22 OLSON V. STATE OF CALIFORNIA
d. Bill of Attainder Claims 9
Concluding that A.B. 5, as amended, is—
notwithstanding its exemptions—“a law of general
applicability to work relationships in California,” the district
court found that Plaintiffs failed to provide “clear proof that
[A.B.] 5, as amended, singles them out.” Id. at 9 (citation
and internal quotation marks omitted).
Following this order, Plaintiffs filed a timely appeal. As
we had not yet resolved Plaintiffs’ appeal of the district
court’s denial of their motion for a preliminary injunction,
we granted Plaintiffs’ motion to consolidate the two appeals.
Our order detailed that we would address the issue of
whether the preliminary injunction was properly denied if
we reversed the district court’s dismissal order. See
Nationwide Biweekly Admin. Inc. v. Owen, 873 F.3d 716,
730-31 (9th Cir. 2017) (discussing the merger of appeals).
II. Standard of Review
We review de novo an order granting a motion to dismiss
for failure to state a claim. See Tingley v. Ferguson, 47 F.4th
1055, 1066 (9th Cir. 2022). “We must determine whether
Plaintiffs’ complaint pleads enough facts to state a claim to
relief that is plausible on its face. . . .” Fowler Packing Co.,
Inc. v. Lanier, 844 F.3d 809, 814 (9th Cir. 2016) (citation
and internal quotation marks omitted). To do so, we credit
“all factual allegations in the complaint as true” and construe
them “in the light most favorable” to the nonmoving party.
Tingley, 47 F.4th at 1066 (citation omitted).
9
A bill of attainder results when legislation specifies affected persons
and inflicts punishment on them without a trial. See SeaRiver Maritime
Fin. Holdings, Inc. v. Mineta, 309 F.3d 662, 668 (9th Cir. 2002).
OLSON V. STATE OF CALIFORNIA 23
We review de novo a district court’s interpretation of
state law. See Killgore v. SpecPro Pro. Servs., LLC, 51 F.4th
973, 982 (9th Cir. 2022). When interpreting state law, we
are bound by the decisions of the state’s highest court. See
id.Finally, “[w]e review a district court’s decision to grant
or deny a preliminary injunction for abuse of discretion.”
Roman v. Wolf, 977 F.3d 935, 941 (9th Cir. 2020) (per
curiam) (citation omitted).
III. Discussion10
A. Equal Protection Claims
As we recently noted in American Society of Journalists
& Authors, Inc. v. Bonta, “[t]he Equal Protection Clause
prohibits states from denying to any person within its
jurisdiction the equal protection of the laws.” 15 F.4th 954,
964 (9th Cir. 2021) (citation, alteration, and internal
quotation marks omitted), cert. denied 142 S. Ct. 2870
(2022). “If the ordinance does not concern a suspect or semi-
suspect class or a fundamental right, we apply rational basis
review and simply ask whether the ordinance ‘is rationally-
related to a legitimate governmental interest.’” Honolulu
Wkly., Inc. v. Harris, 298 F.3d 1037, 1047 (9th Cir. 2002)
(citation and internal quotation marks omitted). We apply
rational basis review in this case. See Am. Soc’y of
Journalists & Authors, 15 F.4th at 964 (applying rational
basis review to A.B. 5); see also Dittman v. California, 191
F.3d 1020, 1031 n.5 (9th Cir. 1999) (noting that “the
Supreme Court has never held that the ‘right’ to pursue a
10
The parties agree that the analysis is the same under federal and state
law.
24 OLSON V. STATE OF CALIFORNIA
profession is a fundamental right, such that any state-
sponsored barriers to entry would be subject to strict
scrutiny”).
Rational basis review is “a fairly forgiving standard,” as
it affords states “wide latitude . . . in managing their
economies.” American Soc’y of Journalists & Authors, 15
F.4th at 965. Under this standard, we “uphold economic
classifications so long as there is any reasonably conceivable
state of facts that could provide a rational basis for them.”
Id. (citation and internal quotation marks omitted). For a
plaintiff whose equal protection claim is subject to rational
basis review to prevail, they must “negate every conceivable
basis which might have supported the distinctions drawn.”
Id. (citation and internal quotation marks omitted).
Even under this “fairly forgiving” standard of review, we
conclude that, considering the particular facts of this case,
Plaintiffs plausibly alleged that A.B. 5, as amended, violates
the Equal Protection Clause for those engaged in app-based
ride-hailing and delivery services.
Plaintiffs plausibly allege that the primary impetus for
the enactment of A.B. 5 was the disfavor with which the
architect of the legislation viewed Uber, Postmates, and
similar gig-based business models. However, the publicly
articulated purpose of A.B. 5 was to “ensure [that] workers
who are currently exploited by being misclassified as
independent contractors instead of recognized as employees
have the basic rights and protections they deserve.” A.B. 5
§ 1(e). But, as Plaintiffs plausibly alleged, the exclusion of
thousands of workers from the mandates of A.B. 5 is starkly
inconsistent with the bill’s stated purpose of affording
workers the “basic rights and protections they deserve.”
A.B. 5 § 1(e). The plausibility of Plaintiffs’ allegations is
OLSON V. STATE OF CALIFORNIA 25
strengthened by the piecemeal fashion in which the
exemptions were granted, and lends credence to Plaintiffs’
allegations that the exemptions were the result of “lobbying”
and “backroom dealing” as opposed to adherence to the
stated purpose of the legislation. As one reporter noted, “[a]
lobbying frenzy led to exemptions for some professions in
which workers have more negotiating power or autonomy
than in low-wage jobs. Among them: lawyers, accountants,
architects, dentists, insurance brokers and engineers.”
Roosevelt, New Labor Laws. And along with the many
categories of workers carved out, A.B. 5, as amended, also
exempts those who work with certain app-based gig
companies that perform errand services, such as Task Rabbit
and Wag!, which have business models that are nearly
identical to Uber and Postmates. There is no indication that
many of the workers in exempted categories, including those
working for the app-based gig companies that are exempted,
are less susceptible to being “exploited by being
misclassified as independent contractors.” A.B. 5 § 1(e).11
And as Plaintiffs plausibly alleged, the referral agency
exemption was expressly amended to exclude Plaintiffs
“after this court had previously indicated” that the referral
exemption “might apply to Plaintiffs.”
Additionally, Plaintiffs plausibly allege that their
exclusion from wide-ranging exemptions, including for
comparable app-based gig companies, can be attributed to
animus rather than reason. In the Second Amended
Complaint, Plaintiffs cited reporting by the Los Angeles
Times that after the passage of A.B. 5 (but before the passage
11
It is notable that during oral argument, counsel for Defendants was
unable to articulate a conceivable rationale for A.B. 5 that explains the
exemptions made by A.B. 5, as amended.
26 OLSON V. STATE OF CALIFORNIA
of A.B. 2257), Assemblywoman Gonzalez stated that she is
“open to changes in the bill next year, including an
exemption for musicians–but not for app-based ride-hailing
and delivery giants.” Roosevelt, New Labor Laws (emphasis
added). As further noted in the Second Amended
Complaint, this statement by Assemblywoman Gonzalez
followed numerous other comments “repeatedly
disparag[ing]” Plaintiffs. We are persuaded that these
allegations plausibly state a claim that the “singling out” of
Plaintiffs effectuated by A.B. 5, as amended, “fails to meet
the relatively easy standard of rational basis review.”
Merrifield v. Lockyer, 547 F.3d 978, 991 (9th Cir. 2008), as
amended. We recognize that we recently rejected an equal
protection challenge to A.B. 5 in American Society of
Journalists and Authors. However, Plaintiffs’ plausible
allegations of Assemblywoman Gonzalez’s animus against
them distinguish the two cases. See 15 F.4th at 966 (“Unlike
the situation in Merrifield, however, nothing about section
2778 suggests that its classifications border on corruption,
pure spite, or naked favoritism . . .”) (citation, alteration, and
internal quotation marks omitted).
We therefore hold that the district court erred by
dismissing Plaintiffs’ equal protection claim. See United
States Dep’t of Agric. v. Moreno, 413 U.S. 528, 534, 538
(1973) (commenting that a legislative “desire to harm a
politically unpopular group cannot constitute a legitimate
governmental interest”).
B. Due Process Claims
We reject Plaintiffs’ contention that the district court
erred by dismissing their due process claims.
“A threshold requirement to a substantive or procedural
due process claim is the plaintiff’s showing of a liberty or
OLSON V. STATE OF CALIFORNIA 27
property interest protected by the Constitution.” Dittman,
191 F.3d at 1029 (citation omitted). And we have
recognized that “[a]lthough the precise contours of that
liberty interest remain largely undefined, the Supreme Court
observed recently that the line of authorities establishing the
liberty interest all dealt with a complete prohibition of the
right to engage in a calling.” Id. (citation, alteration, and
internal quotation marks omitted).
The district court correctly dismissed Plaintiffs’ due
process claims because Plaintiffs failed to plausibly allege
that A.B. 5, as amended, completely prohibits them from
exercising their “right to engage in a calling.” Id. In
addition, Plaintiffs’ allegations do not plausibly allege that
A.B. 5, as amended, would bar Olson and Perez from
continuing their work as “business owners in the sharing
economy” with network companies that are exempted from
A.B. 5, as amended. These allegations are insufficient to
plausibly allege a due process violation because, as we have
previously held, “people do not have liberty interests in a
specific employer.” Blantz v. Cal. Dep’t of Corr. & Rehab.,
727 F.3d 917, 925 (9th Cir. 2013) (citation and alteration
omitted).
Reclassifying on-demand drivers as employees does not
completely prohibit these drivers from engaging in a calling.
Olson and Perez are still free to “use apps to facilitate the
transportation of passengers or deliveries”; they are merely
barred under A.B. 5, as amended, from doing so as
independent contractors. These allegations simply do not
establish a complete prohibition of Olson and Perez’s chosen
“field of employment.” Franceschi v. Yee, 887 F.3d 927,
937–38 (9th Cir. 2018). Rather, the infringement is on the
means of engaging in their chosen work. As a result,
Plaintiffs failed to plausibly allege that a protected liberty or
28 OLSON V. STATE OF CALIFORNIA
property interest was infringed. See Sierra Med. Servs. All.
v. Kent, 883 F.3d 1216, 1226 (9th Cir. 2018) (concluding
that the plaintiff’s due process claims were without merit
because they were not rooted in a constitutionally protected
interest).
C. Contract Clause Claims
A state law violates the Contract Clause if it “(1) operates
as a substantial impairment of a contractual relationship, and
(2) is not drawn in an appropriate and reasonable way to
advance a significant and legitimate public purpose.” CDK
Glob. LLC v. Brnovich, 16 F.4th 1266, 1279 (9th Cir. 2021)
(citation, alteration, and internal quotation marks omitted).
Determining whether a state law substantially impairs a
contractual relationship involves three inquiries: 1) “whether
there is a contractual relationship,” 2) “whether a change in
law impairs that contractual relationship,” and 3) “whether
the impairment is substantial.” RUI One Corp. v. City of
Berkeley, 371 F.3d 1137, 1147 (9th Cir. 2004) (citation
omitted).
Plaintiffs satisfied the first component of this inquiry
through their allegation that Uber and Postmates are “parties
to valid contracts with the app-based drivers who use their
apps, including [Olson and Perez].”
Plaintiffs satisfied the second component by alleging that
“[e]nforcement of [A.B. 5, as amended] would substantially
impair existing contracts . . . between [Uber and Postmates]
and the app-based drivers who use their apps, including
[Uber and Postmates’] contracts with [Olson and Perez].”
More specifically, Plaintiffs alleged that A.B. 5, as amended,
“would severely modify key contractual rights in those
contracts (such as various rights to flexibility), and would
OLSON V. STATE OF CALIFORNIA 29
impose new obligations to which the parties did not
voluntarily agree to undertake, such as a duty of loyalty,
unemployment coverage, and other employment benefits.”
Nevertheless, the district court properly dismissed
Plaintiffs’ Contract Clause claims because Plaintiffs failed
to plausibly allege the third component of the inquiry.
Plaintiffs asserted that A.B. 5, as amended, would “eliminate
the very essence of the contractual bargain in these existing
contracts, interfere with the reasonable expectations under
these existing contracts, and eliminate the primary value of
those contracts,” because “[t]he classification of app-based
drivers as independent contractors under the existing
contracts . . . is a critical feature” of these contractual
relationships. Even after taking this allegation as true—as
we must at this juncture, see Tingley, 47 F.4th at 1066—we
conclude that A.B. 5, as amended, does not violate the
Contract Clause because it neither interferes with Plaintiffs’
reasonable expectations nor prevents them from
safeguarding or reinstating their rights. Notably—as
Plaintiffs conceded at oral argument—nothing in A.B. 5, as
amended, prevents Plaintiffs from amending their contracts
in response to the statute’s requirements.
Although Plaintiffs’ Second Amended Complaint
alleged that A.B. 5, as amended, infringed upon their
“reasonable expectation in the enforcement of their
contracts,” we are not persuaded that these allegations
plausibly allege that Plaintiffs had a “reasonable
expectation” that their contractual terms were immune from
regulation. We have consistently held that states have
“clear” authority to regulate employment conditions. See
e.g., RUI One Corp., 371 F.3d at 1150 (“The power to
regulate wages and employment conditions lies clearly
within a state’s . . . police power. . . .”). And, “California
30 OLSON V. STATE OF CALIFORNIA
law is clear that the label placed by the parties on their
relationship is not dispositive.” Alexander v. FedEx Ground
Package Sys., Inc., 765 F.3d 981, 989 (9th Cir. 2014)
(citation, alteration, and internal quotation marks omitted).
We remain unconvinced that Plaintiffs’ allegations required
the district court to conclude that Plaintiffs’ contract clause
claims were plausible. See generally Hotop v. City of San
Jose, 982 F.3d 710, 717 (9th Cir. 2020) (concluding that
plaintiffs failed to plausibly allege a Contracts Clause claim
when the plaintiffs did “not specify how” the ordinance
affected the contracts) (footnote reference omitted)
(emphasis added).
D. Bill of Attainder Claims
“A bill of attainder is a law that legislatively determines
guilt and inflicts punishment upon an identifiable individual
without provision of the protections of a judicial trial. . . .”
SeaRiver Maritime Fin. Holdings, 309 F.3d at 668 (citation
and internal quotation marks omitted). A statute is a Bill of
Attainder if it “(1) specifies the affected persons, and (2)
inflicts punishment (3) without a judicial trial.” Id. (citation
omitted).
Plaintiffs’ Bill of Attainder claims fail because Plaintiffs
did not plausibly allege that A.B. 5, as amended, inflicts
punishment on them. In assessing whether a statute inflicts
punishment we assess the following factors: “(1) whether
the challenged statute falls within the historical meaning of
legislative punishment; (2) whether the statute, reviewed in
terms of the type and severity of burdens imposed
reasonably can be said to further nonpunitive legislative
purposes; and (3) whether the legislative record evinces a
[legislative] intent to punish.” Id. at 673 (citations and
internal quotation marks omitted).
OLSON V. STATE OF CALIFORNIA 31
Plaintiffs’ allegations fail the plausibility test on the first
factor. In SeaRiver, we described the historical means of
punishment that characterize an unconstitutional Bill of
Attainder as legislation that “sentenced the named individual
to death, imprisonment, banishment, the punitive
confiscation of property by the sovereign, or erected a bar to
designated individuals or groups participating in specified
employments or vocations.” Id. (citation omitted). Nothing
in Plaintiffs’ allegations plausibly allege punishment that
conforms to this historical description. The closest
allegations assert interference with Plaintiffs’ business
model. But even that allegation does not plausibly allege
punishment. See id. at 673–74 (concluding that there was no
bar to employment as long as the Plaintiffs continued to
operate their business).
Nor do Plaintiffs’ allegations plausibly describe a
legislative intent to punish. To be sure, as previously
discussed, Plaintiffs alleged that Defendants have animus
against them. But animus does not necessarily translate into
punitive intent. The purpose of A.B. 5 § 1(e), as amended,
is remedial—to prevent worker misclassification. See A.B.
5 § 1(e). While the allegations of inconsistent exemptions
and animus state a claim that A.B. 5, as amended, lacks a
rational basis, “[a]bsent more compelling support in the
record, we cannot conclude that there is ‘unmistakable
evidence of punitive intent.’” SeaRiver, 309 F.3d at 677(citation omitted); see also Fowler Packing Co. v. Lanier,
844 F.3d 809, 819 (9th Cir. 2016) (“While such intent [for
political expediency] does not align with a legitimate
justification for a law, it is distinct from an intent to
punish.”). Given the absence of plausible allegations of both
an alignment with historical notions of punishment and
punitive intent, Plaintiffs fail to state a claim that A.B. 5, as
32 OLSON V. STATE OF CALIFORNIA
amended, represents a Bill of Attainder. SeaRiver, 309 F.3d
at 674.
E. Preliminary Injunction.
Pursuant to our previous Order on Motion to Consolidate
and Motion to Dismiss, we “address the issue of whether the
preliminary injunction was properly denied” because “the
district court’s dismissal order is reversed.” See Nationwide
Biweekly Admin., 873 F.3d at 730–31 (discussing the merger
of appeals). Because we reverse in part the district court’s
dismissal order, we now address the district court order
denying Plaintiffs’ motion for a preliminary injunction.
The district court denied Plaintiffs’ motion for a
preliminary injunction based on the allegations contained in
the Initial Complaint. The district court’s dismissal order
dismissed Plaintiffs’ Second Amended Complaint, which
contained allegations regarding facts—namely the passage
of A.B. 2257 and Prop. 22—that did not exist when the
Initial Complaint was filed. Although we could review the
district court’s order to determine whether it abused its
discretion by denying Plaintiffs’ motion, see Roman, 977
F.3d at 941, the more prudent course of action is a remand
for the district court to reconsider Plaintiffs’ motion for a
preliminary injunction, considering the new allegations
contained in the Second Amended Complaint. See Arizona
Libertarian Party, Inc. v. Bayless, 351 F.3d 1277, 1283 (9th
Cir. 2003) (per curiam) (remanding to the district court
where it was “better able to decide the question in the first
instance”) (citation omitted).
We therefore remand Plaintiffs’ motion for a preliminary
injunction for reconsideration, consistent with this Opinion.
OLSON V. STATE OF CALIFORNIA 33
IV. Conclusion
We conclude that the district court erred by dismissing
Plaintiffs’ Equal Protection claims. However, the district
court correctly dismissed Plaintiffs’ Due Process claims,
Contract Clause claims, and Bill of Attainder claims.
We remand the district court’s order denying Plaintiffs’
motion for a preliminary injunction for reconsideration.
REVERSED IN PART, AFFIRMED IN PART, and
REMANDED.