Colopy v. Uber Technologies Inc.

          ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION, GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS, AND DENYING DEFENDANT'S MOTION TO STRIKE Docket Nos. 2, 11

          Edward M. Chen United States District Judge.

         I. INTRODUCTION

         Thomas Colopy (“Plaintiff”) works as a driver for Uber Technologies, Inc. (“Defendant” or “Uber”). Plaintiff brings this putative class action alleging that Uber misclassifies its drivers as independent contractors, while California law requires that they be classified as employees. Plaintiffs have filed a Motion for Preliminary Injunction, and Defendants have filed a Motion to Dismiss and a Motion to Strike.

         II. BACKGROUND

         A. Factual Background

         Plaintiff is Thomas Colopy, a resident of San Francisco, California, who has worked as an Uber driver since 2012. See Class Action Complaint (“Complaint”) ¶ 5. Defendant is Uber Technologies, Inc., a corporation headquartered in San Francisco, California. Id. ¶ 7, 10. Mr. Colopy brings the case as a putative class action. Id. ¶ 6, 33. He seeks damages, as well as declaratory and injunctive relief. Id. ¶ 4.

         Plaintiff alleges the following. Uber has “misclassified its drivers, including Plaintiff Thomas Colopy, as independent contractors when they should be classified under California law as employees.” Id. ¶ 2. This alleged misclassification has permitted the company to require drivers to pay their own business expenses, to avoid paying minimum wage and overtime premiums, and to avoid providing itemized wage statements in violation of the California Labor Code. See Id. ¶ 2, 28-30.

         Plaintiff further asserts that Uber's actions constitute “willful misclassification” pursuant to California Labor Code Section 226.8. Id. In support of that contention, Plaintiff highlights the passage of Assembly Bill 5 (“AB5”), codifying the California Supreme Court decision Dynamex Operations W., Inc. v. Superior Court, 4 Cal. 5th 903');">4 Cal. 5th 903 (2018), reh'g denied (June 20, 2018), “under which an alleged employer cannot justify classifying workers as independent contractors who perform services within its usual course of business.” Id. ¶ 3, 31. Plaintiff contends that the author of the bill specifically intended that it would cover Uber, and when Uber failed to obtain a “carve-out” from AB5, it “publicly stated that it intends to defy th[e] statute and continue to classify its drivers as independent contractors.” Id.; see also Id. ¶ 32. B. Procedural Background Plaintiff filed a Class Action Complaint on October 8, 2019. See Docket No. 1. That same day, Plaintiff also filed a Motion for Preliminary Injunction. See Docket No. 2. On October 10, 2019, the case was related to O'Connor v. Uber Technologies, Inc. (Case No. 3:13-cv-03826) and reassigned to this Court. See Docket No. 8. On October 18, 2019, Defendant filed a Motion to Dismiss and a Motion to Strike. See Docket No. 11. A motion for class certification has not yet been filed. These are the only three motions pending before the Court.

         III. DISCUSSION

         A. Preliminary Injunction

         Within the Ninth Circuit, the issuance of class-wide relief prior to the certification of the class is strongly disfavored. See M.R. v. Dreyfus, 697 F.3d 706, 738 (9th Cir. 2012) (citing Zepeda v. INS, 753 F.2d 719 (9th Cir. 1985). In Zepeda, the court held: “Without a properly certified class, a court cannot grant relief on a class-wide basis. . . . This is particularly true when, as here, a preliminary injunction is involved.” Id. at 728 n.1. See also Id. (“A district court's power to issue a preliminary injunction should not be broader in scope with respect to nonparties than its powers following a full trial on the merits.”).

         Although exceptions to this general rule have been permitted (particularly in the civil rights context), those exceptions are bound by “narrow confines.” Zepeda, 753 F.2d at 728 n.1. For example, class certification may not be necessary prior to the issuance of injunctive relief where “the relief necessary . . . for individual plaintiffs would be identical to that necessary for a class.” Id. (discussing Bailey v. Patterson, 323 F.2d 201 (5th Cir. 1963), cert. denied, 376 U.S. 910 (1964)). In Bailey, the Fifth Circuit explained:

Appellants do not seek the right to use those parts of segregated facilities that have been set aside for use by “whites only.” They seek the right to use facilities which have been desegregated, that is, which are open to all persons, appellants and others, without regard to race. The very nature of the rights appellants seek to vindicate requires that the decree run to the benefit not only of appellants but also for all persons similarly situated.

Bailey, 323 F.2d at 206 (emphasis added). Thus, “the relief required for the individual plaintiffs [in Bailey] was necessarily identical to the relief that would have been granted had a class action been filed.” Zepeda, 753 F.2d at 728 n.1. That is not true of the case at bar. Relief can be granted to Mr. Colopy without necessarily granting relief to other drivers.^[1]

         Plaintiff argues that pre-certification injunctive relief is appropriate because “Plaintiff is seeking public-not class-wide-injunctive relief.” Reply in Support of Preliminary Injunction (“PI Reply”) at 10, Docket No. 21. This argument is not convincing. Even if “public” injunctive relief could be sought on a preliminary basis, ^[2] Mr. Colopy does not seek a public injunction under McGill. “Merely declaring that a claim seeks a public injunction . . . is not sufficient to bring that claim within the bounds of the rule set forth in McGill.” Sponheim v. Citibank, N.A., No. SACV19264JVSADSX, 2019 WL 2498938, at *4 (C.D. Cal. June 10, 2019) (quoting Blair v. Rent-A-Center, Inc., No. C 17-02335 WHA, 2017 WL 4805577, at *2 (N.D. Cal. Oct. 25, 2017)); see also Johnson v. JP Morgan Chase Bank, N.A., No. EDCV 172477 JGB (SPx), 2018 WL 4726042, at *6 (C.D. Cal. Sept. 18, 2018) (“Merely requesting relief which would generally enjoin a defendant from wrongdoing does not elevate requests for injunctive relief to requests for public injunctive relief.”); Wright v. Sirius XM Radio Inc., No. SACV 16-01688, 2017 WL 4676580, at *9 (C.D. Cal. June 1, 2017) (finding a request for injunctive relief to be a request for private injunctive relief because the “generalized allegations” about harm to the public did not change the fact that “any benefit to the public [would be] merely ‘incidental'”). Public injunctive relief must actually “ha[ve] the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public.” McGill v. Citibank, N.A., 2 Cal. 5th 945');">2 Cal. 5th 945, 955 (2017) (quoting Broughton v. Cigna Healthplans of California, 21 Cal.4th 1066, 1077 (1999)). “Relief that has the primary purpose or effect of redressing or preventing injury to an individual plaintiff-or to a group of individuals similarly situated to the plaintiff-does not constitute public injunctive relief.” Magana v. DoorDash, Inc., 343 F.Supp.3d 891 (N.D. Cal. 2018) (Hamilton, J.) (quoting McGill, 2 Cal. 5th at 955).

         In Magana, the court examined McGill in a case very analogous to the one at bar:

Here, plaintiff's operative complaint and proposed amended complaint both seek injunctive relief only for his California Labor Code claims. Those claims have the primary purpose and effect of redressing and preventing harm to DoorDash's employees. Indeed, plaintiff's argument makes clear that the injunctive relief he seeks would be entirely opposite of what McGill requires-any benefit to the public would be derivate of and ancillary to the benefit to DoorDash's employees (in the form of, for example, the company's increased tax payments and employees' possible decreased dependence on assistance from the state government). Therefore, Magana does not assert a claim for public injunctive relief under state law.

Magana, 343 F.Supp.3d at 901. Similarly, in Clifford v. Quest Software Inc., 38 Cal.App. 5th 745, 755 (Ct. App. 2019), review denied (Nov. 13, 2019), the California Court of Appeal found that the “public interest and any incidental benefit to the public from ensuring Quest's compliance with wage and hour laws [stemming from misclassification as an exempt employee] d[id] not transform Clifford's private UCL injunctive relief claim into a public one under the definitions of public and private injunctive relief articulated by our Supreme Court in Broughton, Cruz, and McGill” and explained that “[u]nder those definitions, an employee's request for an injunction requiring his employer to comply with the Labor Code is indisputably private in nature.” Clifford, 38 Cal.App. 5th at 755. Other courts have declined to find the injunctive relief public in analogous circumstances. See, e.g., McGovern v. U.S. Bank N.A., 362 F.Supp.3d 850, 858 (S.D. Cal. 2019) (“any injunction . . . would primarily benefit only USB account-holders who would otherwise incur the duplicate OON Fees or OD Fees in the future”); Croucier v. Credit One Bank, N.A., No. 18CV20-MMA (JMA), 2018 WL 2836889, at *5 (S.D. Cal. June 11, 2018) (declining to find that the injunctive relief was public injunctive relief where “the putative class affected by the alleged conduct [robo-calls to customers who failed to make timely payments and who also revoked consent to receive such calls] would be limited to a small group of individuals similarly situated to the plaintiff”).

         McGill does not apply here. As in Clifford and Magana, Mr. Colopy is seeking a private, not public, injunction.

         Finally, Uber's arbitration agreement-to which many members of the putative class are bound-underscores the fact that preliminary injunctive relief is inappropriate at this stage. This arbitration agreement has been upheld as enforceable by the Ninth Circuit. See O'Connor v. Uber Techs., Inc., 904 F.3d 1087, 1094 (9th Cir. 2018); see also Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1208 (9th Cir. 2016). As a result, the number of drivers entitled to injunctive relief is likely to be a small subset of all drivers. The scope of an enforceable injunction is ill-defined at this juncture. This underscores the prematurity of Mr. Colopy's motion for broad preliminary injunctive relief.

         The Court thus DENIES Plaintiff's Motion for Preliminary Injunction.

         B. Motion to Dismiss

         Under Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), a plaintiff's factual allegations in the complaint “must . . . suggest that the claim has at least a plausible chance of success.” In re Century Aluminum Co. Securities Litigation, 729 F.3d 1104, 1107 (9th Cir. 2013). In other words, the complaint “must allege ‘factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'”

         The Ninth Circuit has settled on a two-step process for evaluating pleadings. It explains the established approach as follows:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Levitt v. Yelp! Inc., 765 F.3d 1123, 1134-35 (9th Cir. 2014). The plausibility standard is not akin to a “probability requirement, ” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between ...