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Instacart Loses on Contractor Injunction Bid, But Gets Stay (1)

Feb. 25, 2020, 12:34 PMUpdated: Feb. 25, 2020, 4:54 PM

San Diego moved another step closer in its effort to make Instacart reclassify full-time shoppers as employees, after a state court judge granted its request for a preliminary injunction but temporarily stayed its enforcement.

Instacart “will be taking steps to keep that stay in place during the appeals process so that Instacart’s service will not be disrupted in San Diego,” and plans to appeal the order “to protect shoppers, customers and retail partners,” the company said in a statement Tuesday.

Meanwhile, San Diego invites “Instacart to work with us to craft a meaningful and fair solution,” to address the misclassification of its employees, City Attorney Mara W. Elliott said Tuesday.

San Diego will likely succeed in proving that Instacart misclassified them under the ABC test, the state’s newly-codified worker classification standard, and California’s strong pro-employee public policy helps tip the balance of equities in its favor, San Diego Superior Court Judge Timothy B. Taylor said in a Feb. 18 order issued late Monday.

The court reiterated much of its tentative ruling issued Feb. 13, but decided to temporarily stay enforcement of the injunction and noted that the order was simplified from its previous versions and prohibitory, rather than mandatory, in nature.

“This is a lively area of the law right now,” the court said, and “the sooner the Court of Appeal can hold forth on these issues, the sooner the parties will have a clear and definite signal of what is expected of them.”

Instacart couldn’t persuade the court that the current federal injunction blocking AB 5 enforcement to California truckers was even relevant to the issues here. Neither the CTA case, or the Uber and Postmates drivers’ challenge, has any impact on this case, the court said.

There’s a clear distinction between the Instacart workers and the California truckers, the court said. Instacart workers aren’t motor carriers under the Federal Aviation Administration Authorization Act, as their delivery role is subordinate to their shopping duties and “could just as easily be carried out on a bicycle.”

Currently, the Ninth Circuit is poised to review the federal court injunction blocking enforcement of AB 5, which codified and expanded the ABC test to California truckers.

San Diego City Attorney Mara W. Elliott was “encouraged” by the court’s previous ruling. “We stand ready to engage with Instacart to ensure it provides relief for its tens of thousands of employees in California,” Elliott said Feb. 14 in a statement.

But Instacart said it’s “in complete compliance with the law” and will “vigorously defend” itself, according to a statement Feb. 14.

San Diego sued Instacart, legally registered as Maplebear Inc., in September 2019, seeking restitution on behalf of its full-time workers for alleged violations of California unfair competition law. Instacart’s motion to compel arbitration is set for a Feb. 28 hearing.

Keker, Van Nest & Peters LLP represents Instacart. The Office of the San Diego City Attorney represents itself.

The case is California vs. Maplebear Inc., Cal. Super. Ct., No. 2019-00048731, order unsealed 2/24/20.

To contact the reporter on this story: Kathleen Dailey at kdailey@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Carmen Castro-Pagan at ccastro-pagan@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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