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Lawson v. Grubhub, Inc.

United States District Court, N.D. California

July 10, 2017

RAEF LAWSON, Plaintiff,
v.
GRUBHUB, INC., et al., Defendants.

          ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT RE: DKT. 102, 103, 112, AND 123

          JACQUELINE SCOTT CORLEY UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Raef Lawson, a former delivery driver, claims that he was an employee of Defendant Grubhub rather than an independent contractor, and thus entitled to certain labor protections including the reimbursement of expenses, minimum wage, and overtime. Cal. Lab. Code. §§ 2802, 1194, 1197, 510, 554. Pending before the Court is Grubhub's motion for summary judgment. (Dkt. No. 103.) Having carefully reviewing the parties' briefs, and having had the benefit of oral argument on June 29, 2017, the Court DENIES Grubhub's motion for summary judgment. There are material issues of disputed fact as to whether Plaintiff should have been treated as an employee and as whether, if he was an employee, Grubhub failed to reimburse for his expenses, for one week failed to pay him overtime, and on three occasions failed to pay him minimum wage.

         BACKGROUND

         Grubhub is an online and mobile food ordering company. (Dkt. 114-1 at 2.) Grubhub users can place a food order for pick up or delivery through the Grubhub platform. (Dkt. No. 104-14 at 3 pg. 27:12-28:5.) Plaintiff worked as a Grubhub delivery driver from August 2015 to February 2016. (Dkt. Nos. 104-1 at 3, 104-6 at 2.)

         Drivers must meet certain preliminary requirements before they can begin driving for Grubhub. Drivers must submit proof of their driver's license and car insurance, be 19 years old, have two years of driving experience, and pass a background check. (Dkt. No. 114-10 at 2-4.) Drivers are not required to have prior experience. (Dkt No. 114-2 at 22 pg. 79:14-16.) Once hired, drivers go through an on-boarding process in person at the Grubhub office or online. (Dkt. No. 114-3 at 35 pgs. 131:23-132-7, 133:7-15.)

         Drivers must use the appropriate bags for insulating food, which they can either buy themselves or lease from Grubhub. (Dkt. Nos. 114-4 at 20, 114-3 at 36 pg. 136:1-17.) Fees for the bags are waived if the drivers wear a Grubhub shirt and hat. (Id.) Drivers must provide a description of their vehicle, including bicycle if applicable, and use and maintain a smartphone at their own expense. (Dkt. No. 114-4 at 5 Sections 5.1, 5.2.) Drivers are not required to lease or rent any products or equipment from Grubhub. (Id. at Section 5.2.) Drivers are responsible for all equipment costs and expenses. (Id. at Section 5.4.)

         Restaurants can rate the performance of the drivers. (Id. at 30 pg. 112: 16-18.) When Grubhub receives a driver complaint, Grubhub managers review the complaint and inform the driver. (Id. at 31 pgs. 115:12-116: 11.) Decisions about whether to terminate a driver are made by Grubhub's corporate employees and the legal department with the input of the driver specialists, who handle anything having to do with the drivers. (Dkt. No. 114-2 at 23 pg. 82:17-84:20.) Pursuant to the Delivery Service Provider Agreement, either Grubhub or the driver can terminate the agreement if either party has materially breached the agreement, or without cause upon 14 days written notice. (Dkt. No. 114-4 at 12 Section 13.1.)

         Pursuant to the Service Level Agreement set forth in Appendix A of the Delivery Service Provider Agreement, Grubhub drivers must:

1. Download the necessary driver tools to fulfill Grubhub Delivery Orders;
2. Sign-up for weekly delivery blocks through either the Grubhub driver app or another means;
3. When a delivery block starts, provide a status update to the dispatcher that the driver is “on-call” via the Grubhub driver tools;
4. Not reject incoming orders or be otherwise unavailable to receive incoming calls during any scheduled block. Exceptions may be made for “extenuating circumstances” if the driver communicates these circumstances to the dispatcher;
5. Provide status updates via the driver app when the driver has arrived at the restaurant, received the food, and leave the restaurant for delivery;
6. Communicate with the Grubhub Care Team and/or dispatcher to notify them of potential diner issues; and
7. Have no more than one moving violation in 24 months or be involved in any at fault accidents.

(Dkt. No. 114-4 at 16.) Grubhub reserves the right to modify these provisions of the Service Level Agreement in its sole discretion. (Id.)

         Consistent with the Service Level Agreement the record reflects that if Grubhub delivery drivers want to deliver food to customers they sign-up for a “block” that specifies the time period and the specific region. (Dkt. No. 114-9 at 34 pg. 33:20-34:5.) Approximately once a week, Grubhub creates a certain number of blocks and releases these blocks to drivers, who sign-up in advance for the blocks they want to work. (Id. pg. 34:9-20.) Managers determine the number of blocks that are released based off of the historical order volume and predictions of how much demand there will be at any given time. (Id. pg. 36: 13-19.) Drivers can also receive orders when they are not signed up for a block by turning on the app and making themselves available. (Dkt. No. 104-16 at 7 pg. 71:3-8.)

         Drivers can choose what market or region they want to deliver in. (Dkt. No. 104-14 at 4 pg. 14-15.) Drivers can request to switch zones by asking a driver specialist. (Dkt. No. 114-16 at 11 pg. 118:16-19.) Drivers are not expected to be in the zone when they start a block or to stay in their zone during the block. (Id. at pg. 119:12-21.)

         When making the calculations as to how many blocks of time to release, managers anticipate that drivers will accept most of the orders they are given for the block they have signed up for. (Id. at 36:24-37:5.) Sometimes, however, drivers receive an offer from Grubhub while they are already making a delivery. (Dkt. No. 114-16 at 145:1-8.) According to Plaintiff, Grubhub would “stack” orders, sending him as many as four to five orders at one time. (Id. 16-19.)

         Only one driver can pick a particular block of time. (Id. pg. 35:8-9.) The blocks vary in length from two to five hours. (Id. at 35:15-19.) Once a driver signs up for a block, he or she is expected to work that block of time. (Id. at 35:20-22.) When a driver's block starts the driver turns on the Grubhub app and “toggle themselves available.” (Id. pg. 34:5-7.) At that point Grubhub sends the driver orders. (Id. pg. 34: 7-8.)

         Drivers are paid in two ways, per delivery and by a minimum hourly rate. (Dkt. No. 114-4 at 19.) Drivers are paid “service fees” of $4.25 per fulfilled delivery plus $.50 per mile between the restaurant and the customer. (Id.) Drivers are also guaranteed a minimum average payment of $15 per hour, inclusive of gratuities, if drivers accept and fulfill 75% of the orders they receive that day, and are available to receive incoming orders for the entirety of their scheduled delivery blocks that week (Monday-Sunday). (Id.) Exceptions to the requirement that drivers remain available to receive orders for all of their scheduled delivery blocks may be made for “extenuating circumstances” if a driver timely communicates such circumstances to a dispatcher. (Id.) If a driver works outside of a scheduled block, they do not receive the hourly minimum. (Dkt. No. 114-7 at 23 pg. 82:5-7.) Drivers are paid on weekly basis, unless otherwise specified by Grubhub. (Dkt. No. 114-4 at 19.)

         Drivers are expected to be available to accept deliveries during their block. (Id. at 36: 20-23.) Attendant, operations, and driver specialists monitor whether a driver is toggled as available and has shown up to perform deliveries. (Id. at 11 pg. 39:17-23.) These specialists “spot check” and if they notice a driver is not available, they may call the driver to determine whether the driver is working. (Id. at pg. 40:10-41:4.) Drivers have had their contracts terminated for not making themselves available for blocks of time they have signed up for. (Id. at 43 pg.44:24-45:7.) Plaintiff was terminated for this reason, that is, for not being available to receive orders and performing delivery services during a high proportion of the delivery blocks he signed up for. (Dkt. No. 114-5 at 2.)

         DISCUSSION

         I. Independent Contractor v. Employee

         Under California law, the plaintiff establishes a prima facie case that the relationship was one of employer/employee once she comes forward with evidence that she provided services for the employer. Narayan v. EGL, Inc., 616 F.3d 895, 900 (9th Cir. 2010). “The fact that one is performing work and labor for another is prima facie evidence of employment and such person is presumed to be a servant in the absence of evidence to the contrary.” Id. at 901. As it is undisputed that Plaintiff provided delivery services to Grubhub, the burden is on Grubhub to prove Plaintiff was an independent contractor. See Yellow Cab Coop. Inc. v. Worker's Comp. Appeals Bd., 226 Cal.App.3d 1288, 1294 (1991) (explaining that under California law there is “a presumption that a service provider is presumed to be an employee unless the principal affirmatively proves otherwise.”)

         Employee/independent contractor status is a mixed question of law and fact under California law. Narayan, 616 F.3d at 901. Because the ultimate determination of Plaintiff's employment status presents a mixed question of law and fact, Grubhub may only obtain summary judgment if all facts and evidentiary inferences material to the employee/independent contractor determination are undisputed, and a reasonable trier of fact viewing those undisputed facts and inferences could reach but one conclusion-that Grubhub drivers are independent contractors. See Alexander v. FedEx Ground Package System, Inc., 765 F.3d 981, 988 (9th Cir. 2014). This standard is difficult to meet at the summary judgment stage, see O'Conner v. Uber Technologies Inc., 82 F.3d 1133, 1148 (N.D. Cal. Mar. 11, 2015), and Grubhub has not met it.

         A. Grubhub's Right to Control the Manner and Means ...


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