1 ROHIT K. SINGLA - # 213057 rohit.singla@mto.com 2 KATHERINE M. FORSTER - # 217609 katherine.forster@mto.com 3 MIRIAM KIM - # 238230 miriam.kim@mto.com 4 JEFFREY Y. WU - # 248784 jeffrey.wu@mto.com 5 JUSTIN P. RAPHAEL - # 292380 justin.raphael@mto.com 6 MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor 7 San Francisco, CA 94105 Telephone: 415 512 4000 8 CHRISTA M. ANDERSON - # 184325 9 canderson@kvn.com RACHAEL E. MENY - # 178514 10 rmeny@keker.com R. JAMES SLAUGHTER - # 192813 11 rslaughter@keker.com BROOK DOOLEY - # 230423 12 bdooley@keker.com ERIC H. MACMICHAEL - # 231697 13 emacmichael@keker.com ELIZABETH K. MCCLOSKEY - # 268184 14 emccloskey@keker.com KEKER, VAN NEST & PETERS LLP 15 633 Battery Street San Francisco, CA 94111-1809 16 Telephone: 415 391 5400 Facsimile: 415 397 7188 17 Attorneys for Defendant Lyft, Inc. 18 19 SUPERIOR COURT OF THE STATE OF CALIFORNIA 20 COUNTY OF SAN FRANCISCO 21 22 PEOPLE OF THE STATE OF CALIFORNIA, Case No. CGC-20-584402 23 LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 24 Plaintiff, vs. Date: Time: Judge: Dept: 25 UBER TECHNOLOGIES, INC., a Delaware Corporation, LYFT, INC., a Delaware 26 Corporation, and DOES 1-50, inclusive, 27 August 13, 2020 11:00 a.m. Hon. Ethan P. Schulman 302 Defendants. 28 Case No. CGC-20-584402 LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL -1- 1 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: 2 PLEASE TAKE NOTICE that on August 13, 2020, at 11:00 a.m., in Department 302 of the 3 San Francisco Superior Court at 400 McAllister Street, San Francisco, CA, 94102, Defendant Lyft, 4 Inc. (“Lyft”) will and hereby does apply ex parte, pursuant to California Rules of Court, rule 3.1200 5 et seq., for an order staying the preliminary injunction pending appeal from the Court’s order 6 granting the preliminary injunction. Good cause exists for the relief requested for the reasons that 7 appear in this Application, the Memorandum below, the accompanying Declarations of Christopher 8 Sholley and Rohit K. Singla and accompanying exhibits, and other evidence cited in the 9 Memorandum. 10 This application is made on the following grounds: first, the preliminary injunction is 11 mandatory and automatically stayed by the perfecting of Lyft’s appeal from the order granting the 12 injunction; second, enforcement of the injunction is likewise automatically stayed under section 916 13 of the Code of Civil Procedure; third, a stay of the preliminary injunction pending appeal is 14 appropriate as a matter of the Court’s discretion because, without a stay, Lyft would be forced to 15 suspend operations in California and risks losing the fruits of its meritorious appeal, which raises 16 substantial questions on several novel legal issues. At a minimum, Lyft requests that the Court 17 extend its 10-day stay until after Lyft has exhausted its effort to obtain a stay of the injunction 18 pending appeal through a writ of supersedeas or other appellate process. 19 Counsel for Lyft provided written notice of this ex parte application in accordance with 20 California Rules of Court, rule 3.1203 on August 11, 2020, by email, to Plaintiff’s counsel and 21 counsel for Defendant Uber Technologies, Inc. (Declaration of Rohit K. Singla ¶ 2, Ex. A.) The ex 22 parte notice was timely and included all of the information required by rule 3.1204. Uber does not 23 contest the relief sought by Lyft and intends to appear at the hearing. Plaintiff opposes the relief 24 sought and intends to appear at the hearing. 25 Pursuant to California Rules of Court, rule 3.1202(a), the names, addresses, telephone 26 number and email addresses for the attorneys representing other parties in this matter are: 27 28 Case No. CGC-20-584402 -2LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 2 3 4 5 6 7 8 9 Attorneys for People of the State of California XAVIER BECERRA Attorney General of California MICHAEL L. NEWMAN Senior Assistant Attorney General SATOSHI YANAI Supervising Deputy Attorney General MINSU D. LONGIARU MARISA HERNÁNDEZ-STERN MANA BARARI R. ERANDI ZAMORA-GRAZIANO Deputy Attorneys General SEAN PUTTICK 10 State of California Department of Justice Office of the Attorney General 1515 Clay Street, 20th Floor P.O. Box 70550 Oakland, California 94612-0550 Telephone: (510) 879-1300 Fax: (510) 622-2270 E-mail: Satoshi.Yanai@doj.ca.gov E-mail: Minsu.Longiaru@doj.ca.gov E-mail: Marisa.Hernandez-Stern@doj.ca.gov E-mail: Mana.Barari@doj.ca.gov E-mail: Erandi.Zamora@doj.ca.gov E-mail: Sean.Puttick@doj.ca.gov 11 12 13 14 15 16 17 18 19 MICHAEL N. FEUER City Attorney, City of Los Angeles MICHAEL BOSTROM Managing Assistant City Attorney DANIELLE GOLDSTEIN Deputy City Attorney DAVID TORRES DANITZA MUNOZ Office of the Los Angeles City Attorney 200 North Spring Street, 14th Floor Los Angeles, CA 90012 Telephone: (213) 978-1867 MARA W. ELLIOTT MARK ANKCORN KEVIN B. KING MARNI VON WILPERT MARISSA GUTIERREZ San Diego City Attorney’s Office 1200 Third Avenue, Suite 1100 San Diego, CA 92101-4100 Telephone: (619) 236-6220 Email: MAnkcorn@sandiego.gov Email: kbking@sandiego.gov Email: mvonwilpert@sandiego.gov Email: marissag@sandiego.gov 20 21 22 23 24 25 26 27 28 Email: michael.bostrom@lacity.org Email: david.torres@lacity.org Email: danitza.munoz@lacity.org DENNIS J. HERRERA RONALD P. FLYNN YVONNE R. MÉRE MOLLY J. ALARCON SARA J. EISENBERG MATTHEW D. GOLDBERG SHINOBU ICHINO MARTINA HASSETT Office of the San Francisco City Attorney 1390 Market Street, Sixth Floor San Francisco, CA 94102-5408 Telephone: (415) 554-3800 Email: Yvonne.Mere@sfcityatty.org Email: Molly.Alarcon@sfcityatty.org Email: Sara.Eisenberg@sfcityatty.org Email: Matthew.Goldberg@sfcityatty.org Email: Shinobu.Ichino@sfcityatty.org Email: Martina.Hassett@sfcityatty.org Case No. CGC-20-584402 -3LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 2 3 4 5 Attorneys for Defendant Uber Technologies, Inc. THEODORE J. BOUTROUS, JR. THEANE EVANGELIS BLAINE H. EVANSON HEATHER L. RICHARDSON GIBSON, DUNN & CRUTCHER LLP 333 South Grand Avenue Los Angeles, CA 90071-3197 Telephone: 213.229.7000 Facsimile: 213.229.7520 6 E-mail: tboutrous@gibsondunn.com E-mail: tevangelis@gibsondunn.com E-mail: bevanson@gibsondunn.com E-mail: hrichardson@gibsondunn.com 7 8 9 10 11 Lyft’s ex parte application is based on this notice and application, the attached memorandum, the Declarations of Christopher Sholley and Rohit K. Singla and accompanying exhibits in support thereof, the proposed order, the evidence and argument previously submitted in 12 this case, and any further evidence or argument that the Court receives prior to decision. 13 14 DATED: August 12, 2020 MUNGER, TOLLES & OLSON LLP 15 16 17 By: Rohit Singla 18 19 Attorney for Defendant Lyft, Inc. 20 21 22 23 24 25 26 27 28 Case No. CGC-20-584402 -4LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL TABLE OF CONTENTS Page 1 2 3 4 MEMORANDUM OF POINTS AND AUTHORITIES ...................................................................9 I. THE AUTOMATIC STAY FOR MANDATORY INJUNCTIONS APPLIES HERE. ....................................................................................................................................9 5 II. ENFORCEMENT OF THE INJUNCTION IS AUTOMATICALLY STAYED. ...............13 6 III. THE COURT SHOULD ENTER A DISCRETIONARY STAY PENDING APPEAL. ..............................................................................................................................14 7 8 IV. 9 V. AN ADMINISTRATIVE STAY PENDING WRIT PETITIONS IS WARRANTED. ...................................................................................................................16 CONCLUSION ....................................................................................................................16 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case No. CGC-20-584402 LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL -5- TABLE OF AUTHORITIES Page 1 2 FEDERAL CASES 3 California Trucking Association v. Becerra (S.D. Cal. 2020) 433 F.Supp.3d 1154 ........................................................................................15 4 5 Olson v. California (C.D. Cal. Feb. 20, 2020) 2020 WL 905572 ..............................................................................15 6 STATE CASES 7 Agricultural Labor Bd. v. Superior Court 8 (1983) 149 Cal.App.3d 709 (Sam Andrew’s) .........................................................................9, 10 9 Agricultural Labor Relations Bd. v. Tex-Cal Land Management, Inc. (1987) 43 Cal.3d 696 ............................................................................................................10, 11 10 11 City of Corona v. AMG Outdoor Advertising, Inc. (2016) 244 Cal.App.4th 291 .......................................................................................................11 12 Davenport v. Blue Cross of California 13 (1997) 52 Cal.App.4th 435 .....................................................................................................9, 10 14 Deepwell Homeowners’ Protective Assn. v. City Council of Palm Springs (1965) 239 Cal.App.2d 63 ..........................................................................................................14 15 16 Dewey v. Superior Court (1889) 81 Cal. 64 ..........................................................................................................................9 17 Feinberg v. Doe 18 (1939) 14 Cal.2d 24 ....................................................................................................................10 19 Food and Grocery Bureau of Southern Cal. v. Garfield (1941) 18 Cal.2d 174 ............................................................................................................14, 15 20 21 Goodall v. Brite (1934) 1 Cal. 2d 583 ...................................................................................................................14 22 Hayworth v. City of Oakland 23 (1982) 129 Cal.App.3d 723 ........................................................................................................10 24 Merced Mining Company v. Fremont (1857) 7 Cal. 130 ..........................................................................................................................9 25 Estate of Murphy 26 (1971) 16 Cal.App.3d 564 ..........................................................................................................16 27 Ohaver v. Fenech (1928) 206 Cal. 118 ......................................................................................................................9 28 Case No. CGC-20-584402 LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL -6- 1 2 TABLE OF AUTHORITIES (Continued) Page 3 4 People ex rel. Bradford v. Laine (1918) 177 Cal. 742 ....................................................................................................................12 5 People ex rel. Brown v. Black Hawk Tobacco, Inc. (2011) 197 Cal.App.4th 1561 .....................................................................................................11 6 7 People ex rel. Brown v. iMergent, Inc. (2009) 170 Cal.App.4th 333 .................................................................................................10, 11 8 People ex rel. Eichenberger v. Stockton Pregnancy Control Medical Clinic, Inc. 9 (1988) 203 Cal. App. 3d 225 ......................................................................................................12 10 People ex rel. Feuer v. FXS Management, Inc. (2016) 2 Cal.App.5th 1154, 1158 ...............................................................................................11 11 12 People ex rel. Herrera v. Stender (2012) 212 Cal.App.4th 614 .................................................................................................11, 12 13 People v. Mobile Magic Sales, Inc. 14 (1979) 96 Cal.App.3d 1 ..............................................................................................................11 15 People v. Stutz (1944) 66 Cal. App. 2d 791 ........................................................................................................12 16 17 Rogers, v. Lyft (S.F. Super.Ct. April 30, 2020) 2020 WL 2532527 ...................................................................12 18 Shoemaker v. County of Los Angeles 19 (1995) 37 Cal.App.4th 618 .........................................................................................................10 20 URS Corp. v. Atkinson/Walsh Joint Venture (2017) 15 Cal.App.5th 872, 886 ...................................................................................................9 21 22 Wolf v. Gall (1916) 174 Cal. 140 ....................................................................................................................13 23 STATE STATUTES 24 Bus. & Prof. Code § 6180 ................................................................................................................11 25 Bus. & Prof. Code § 6180.1 .............................................................................................................11 26 Bus. & Prof. Code § 17203 ..............................................................................................................12 27 Bus. & Prof. Code § 17204 ..............................................................................................................12 28 Case No. CGC-20-584402 -7LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL TABLE OF AUTHORITIES (Continued) 1 Page 2 3 4 5 Code Civ. Proc. § 731 ......................................................................................................................12 Code Civ. Proc. § 916 ................................................................................................................13, 14 6 Code Civ. Proc. § 916(a) ..................................................................................................................13 7 Code Civ. Proc. § 918(a) ..................................................................................................................14 8 Lab. Code § 246 ...............................................................................................................................12 9 Lab. Code § 1153 .............................................................................................................................11 10 Lab. Code § 1160.4 ....................................................................................................................10, 12 11 Pen. Code § 653.55 ..........................................................................................................................11 12 Pen. Code § 11166 ...........................................................................................................................12 13 14 Pen. Code § 11227 ...........................................................................................................................12 STATUTES - OTHER 15 Corona Municipal Code § 17.74.160 ...............................................................................................11 16 FEDERAL REGULATIONS 17 18 Fed. Regs. § 1003.102(f) ..................................................................................................................11 19 20 21 22 23 24 25 26 27 28 Case No. CGC-20-584402 -8LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 2 MEMORANDUM OF POINTS AND AUTHORITIES Lyft filed its notice of appeal from the Court’s preliminary injunction on August 12, 2020. 3 To ensure the effectiveness of the appeal, Lyft now seeks to confirm that the injunction is subject to 4 an automatic stay. In the alternative, Lyft seeks a discretionary stay of the injunction. Because Lyft 5 cannot transform its operations at the flip of a switch, if the injunction goes into effect, Lyft will 6 have to immediately suspend operation of its rideshare platform in California. At a minimum, Lyft 7 requests an administrative stay while it seeks a stay from the appellate courts. 8 I. THE AUTOMATIC STAY FOR MANDATORY INJUNCTIONS APPLIES HERE. 9 “California has had the rule that an appeal automatically stays mandatory injunctions for 10 more than 100 years.” (Agricultural Labor Bd. v. Superior Court (1983) 149 Cal.App.3d 709, 716 11 (Sam Andrew’s).) The reason is simple and has been part of California law from its very beginning: 12 Absent a stay, an appeal from a mandatory injunction risks being rendered “ineffectual,” because 13 the defendant would be compelled to perform the affirmative acts required by the injunction before 14 the appeal is decided. (Merced Mining Company v. Fremont (1857) 7 Cal. 130, 132; Dewey v. 15 Superior Court (1889) 81 Cal. 64, 68 [without automatic stay of mandatory injunction, “the result 16 of the final adjudication might often be a barren victory.”].) 17 The Court’s August 10 Order (“Order”) is a mandatory injunction because it “compels 18 performance of an affirmative act that changes the position of the parties.” (Davenport v. Blue Cross 19 of California (1997) 52 Cal.App.4th 435, 446 (Davenport).) Whether an injunction is mandatory or 20 prohibitory turns not on the language used but on “the effect upon the parties against whom it is 21 issued.” (Ohaver v. Fenech (1928) 206 Cal. 118, 122, italics added.) For example, in URS the court 22 held that an order merely disqualifying counsel was mandatory because, as a practical matter, it 23 required the client to “hire replacement counsel.” (URS Corp. v. Atkinson/Walsh Joint Venture 24 (2017) 15 Cal.App.5th 872, 886.) There is no question that the injunction here would, as a practical 25 matter, require extensive affirmative action. At a minimum, Lyft would need to dramatically 26 restructure its business and terminate its current relationship with hundreds of thousands of drivers, 27 as the Order recognizes. (Order at 6:2-4.) Plaintiff’s acknowledged goal is, after all, to force Lyft to 28 hire drivers as employees. Case No. CGC-20-584402 LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL -9- 1 Any dispute over whether the injunction here is mandatory is resolved by Sam Andrew’s, 2 supra, 149 Cal.App.3d 709. In that case, the government obtained an injunction under Labor Code 3 section 1160.4 enjoining defendant from continuing to employ certain workers until striking 4 workers were rehired. (Id. at pp. 712-13.) Although the injunction was couched in prohibitory 5 language, the Court of Appeal held the injunction was mandatory because it had the practical effect 6 of compelling defendant “to take affirmative action by terminating present employees.” (Ibid.) The 7 injunction here is likewise mandatory because it requires Lyft to terminate its existing relationships 8 with hundreds of thousands of drivers—relationships that go back many years—as well as engage 9 in a substantial restructuring. 10 Indeed, every California case cited by the parties involving an injunction affecting the status 11 of workers has deemed it mandatory. In Shoemaker, the court held an injunction requiring a hospital 12 to “refrain from removing” an employee “was undoubtedly mandatory in nature.” (Shoemaker v. 13 County of Los Angeles (1995) 37 Cal.App.4th 618, 625, fn. 4.); see also Feinberg v. Doe (1939) 14 14 Cal.2d 24, 27 [injunction restraining defendant “from employing” worker was “in its essence and 15 effect a mandatory injunction”]; Hayworth v. City of Oakland (1982) 129 Cal.App.3d 723, 728 16 [injunction requiring worker promotion was mandatory].) The Supreme Court has also agreed that 17 portions of a judgment “which required affirmative acts, such as reinstatement [of striking workers] 18 … were ‘clearly mandatory.’” (Agricultural Labor Relations Bd. v. Tex-Cal Land Management, Inc. 19 (1987) 43 Cal.3d 696, 706, fn. 9 (Tex-Cal).) 20 Plaintiff also contemplates that Lyft would be required to make payments, to drivers and to 21 the government, under the injunction. (See, e.g., Plaintiff’s Mot. for Prelim. Injunction (June 25, 22 2020), pp. 33-34.) An injunction seeking the payment of money is mandatory. (Davenport, supra, 23 52 Cal.App.4th at pp. 443, 447 [injunction “prohibiting” Blue Cross from “denying … coverage and 24 benefits” and “refusing to reimburse Plaintiff” for health care treatment was mandatory].) 25 This Court’s Order repeats Plaintiff’s view that an injunction restraining continuing 26 violations of a law is prohibitory because “any aspects of such an injunction that ‘require defendants 27 to engage in affirmative conduct are merely incidental.’” (Order, p. 16 [citing People ex rel. Brown 28 v. iMergent, Inc. (2009) 170 Cal.App.4th 333].) Respectfully, Plaintiff is wrong. No case says that. Case No. CGC-20-584402 -10LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 As discussed above, Sam Andrew’s and Tex-Cal are directly to the contrary. The injunctions there 2 sought to prevent continuing violation of Labor Code section 1153, but were deemed mandatory. 3 iMergent itself states no such rule and instead cites the traditional test for distinguishing mandatory 4 and prohibitory injunctions. (iMergent, 170 Cal.App.4th at p. 342.) The iMergent court found the 5 injunction prohibitory because it merely prohibited the sale of certain products. (Id. at pp. 338, 342.) 6 Injunctions prohibiting continued sales or advertising—unlike injunctions affecting the status of 7 workers—are often deemed prohibitory. (See, e.g., People v. Mobile Magic Sales, Inc. (1979) 96 8 Cal.App.3d 1, 13 [prohibiting sale and display of mobile homes]; People ex rel. Brown v. Black 9 Hawk Tobacco, Inc. (2011) 197 Cal.App.4th 1561, 1571 [prohibiting sale of cigarettes to certain 10 buyers]; People ex rel. Feuer v. FXS Management, Inc. (2016) 2 Cal.App.5th 1154, 1158 11 [prohibiting sale of marijuana].) 12 It is common for injunctions restraining continued violations of a statute to be deemed 13 mandatory, as demonstrated by the very cases cited in the Court’s Order. In City of Corona, the 14 government obtained a preliminary injunction to restrain continued violation of Corona Municipal 15 Code section 17.74.160 relating to billboards. (City of Corona v. AMG Outdoor Advertising, Inc., 16 (2016) 244 Cal.App.4th 291, 295, as mod. Jan. 26, 2016.) The court of appeals had no trouble 17 concluding that was a mandatory injunction because it required removal of a billboard, i.e., “an 18 affirmative act that changes the status quo.” (Id. at p. 299.) The fact that the injunction also prevented 19 continuing violation of a statute was immaterial. Similarly, in Stender, the government obtained a 20 preliminary injunction to enjoin a law firm from refusing to notify its clients that one of its lawyers 21 had resigned from the bar. (People ex rel. Herrera v. Stender (2012) 212 Cal.App.4th 614, 627, as 22 mod. Jan. 16, 2013.) The refusal to give notice violated various provisions of the Business and 23 Professions Code, the Penal Code, and federal regulations. 1 Even though the injunction prevented 24 continuing violation of these laws, the court easily concluded that the injunction was mandatory 25 because it required affirmative action. (See Stender, supra, 212 Cal.App.4th at p. 630.) There are 26 27 28 1 See Bus. & Prof. Code §§ 6180, 6180.1; Pen. Code § 653.55; tit. 8, Code of Fed. Regs. § 1003.102(f). Case No. CGC-20-584402 -11LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 many similar cases. 2 2 Whether the injunction is mandatory depends on its practical effect on Lyft, not on whether 3 the government is the plaintiff or whether the law at issue authorizes injunctive relief. As these cases 4 show, the government is subject to the same well-established rules regarding mandatory injunctions 5 as private litigants. Nor does it matter that A.B. 5 specifically authorizes an injunction. In Sam 6 Andrew’s, the government’s injunction was expressly authorized by Labor Code section 1160.4. In 7 Stender, supra, the government’s injunction was authorized by Business & Professions Code 8 sections 17203 and 17204. The government’s injunction in Laine, supra, was authorized by Penal 9 Code section 11227 and in Stutz by Code of Civil Procedure section 731. Yet these injunctions were 10 all deemed mandatory. Ultimately, there is no basis to distinguish this injunction from the one sought in Rogers, v. 11 12 Lyft (S.F. Super.Ct. April 30, 2020) 2020 WL 2532527, which sought to “enjoin[] Lyft from 13 misclassifying its drivers in California as independent contractors and thereby denying these 14 workers their rights under the Labor Code, including state mandated paid sick leave in violation of 15 Cal. Lab. Code § 246, as well as local ordinances.” (2020 WL 2532527, at p. *1.) Like the injunction 16 here, that injunction sought to require reclassification of drivers, with sick leave being just one 17 supposed benefit. This Court concluded in Rogers that this was a “a mandatory injunction that would 18 drastically change the status quo by compelling Lyft to reclassify all of its hundreds of thousands of 19 California drivers as employees.” (Id. at p. *7; see also id. at p. *6 [noting the “sweeping mandatory 20 injunctive relief” requested].) At oral argument, the Court admonished the parties to acknowledge 21 the mandatory nature of the injunction: 22 THE COURT: All right. I don't think there’s any question but that the injunction that’s being sought here would in fact drastically change the existing status quo, and would constitute a mandatory preliminary injunction rather than a prohibitory 23 24 2 (See, e.g., People ex rel. Eichenberger v. Stockton Pregnancy Control Medical Clinic, Inc. (1988) 203 Cal. App. 3d 225 [injunction brought by government to enforce Penal Code § 11166 was subject 26 to automatic stay because it required a clinic to report on its clients’ conduct]; People v. Stutz (1944) 66 Cal. App. 2d 791 (Stutz) [injunction obtained by government under Code Civ. Proc. § 731 was 27 mandatory because it required defendants to vacate a building]; People ex rel. Bradford v. Laine (1918) 177 Cal. 742 (Laine) [injunction obtained by to enforce Penal Code § 11227 was mandatory 28 because it required the removal of tenants and the sale of furniture].) Case No. CGC-20-584402 -1225 LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 2 injunction. I think we all have to be... to be intellectually honest, we all have to acknowledge that. 3 (Singla Declaration ¶ 7, Ex. E, p. 27:5-11.) There is nothing different about this case or this 4 injunction to justify a different conclusion as to the mandatory nature of the injunction. 5 II. ENFORCEMENT OF THE INJUNCTION IS AUTOMATICALLY STAYED. 6 Enforcement of the injunction is also stayed under Code of Civil Procedure section 916, 7 subdivision (a), which provides that “the perfecting of an appeal stays proceedings in the trial court 8 upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, 9 including enforcement of the judgment or order.” (Italics added.) The appeal was perfected on 10 August 12, 2020. 11 Here, extensive proceedings would be necessary to give the injunction effect. The injunction 12 does not specify how Lyft is supposed to comply, and Plaintiff itself has suggested it would “assist 13 the Court in exercising its broad discretion to fashion appropriate relief.” (Plaintiff’s Reply ISO 14 Prelim. Injunction (July 30, 2020) (“Reply”), p. 29.) If there were a dispute about, for example, the 15 payments or benefits Plaintiff believes Lyft is required to provide, the Court would be forced to get 16 involved to “fashion” relief even while the Court of Appeal is reviewing the propriety of the 17 injunction itself. While the injunction clearly seeks to force Lyft to hire drivers as employees, 18 Plaintiff has also stated that one possible alternative for Lyft would be to implement “a marketplace 19 that authentically supports Drivers as independent business persons and entrepreneurs.” (Reply, p. 20 25:19-20.) The nature of that marketplace is left entirely undefined and could also result in extensive 21 disputes and enforcement proceedings. But section 916(a) expressly precludes enforcement 22 proceedings on an order being appealed. Indeed, the need to enforce complex injunction such as this 23 is part of the rationale for granting automatic stays of mandatory injunctions. (Wolf v. Gall (1916) 24 174 Cal. 140, 142 [for a mandatory injunction “the contempt proceeding is a kind of process to carry 25 into execution the affirmative command embodied in the judgment”].) 26 The court in People v. Maplebear thus recognized that the injunction it issued against 27 Instacart was subject to an automatic stay pursuant to section 916 because “[c]ontempt proceedings” 28 to enforce the injunction “would be fundamentally inconsistent with preserving the Court of Case No. CGC-20-584402 -13LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 Appeal’s authority during the pendency of appeal.” (Singla Decl. ¶ 6, Ex. D, p. 4.) The injunction 2 here is subject to the section 916 automatic stay for the same reason. 3 III. THE COURT SHOULD ENTER A DISCRETIONARY STAY PENDING APPEAL. 4 In addition to the automatic stay, the Court may enter a discretionary stay pending appeal 5 under Code of Civil Procedure section 918, subdivision (a). A discretionary stay is appropriate if 6 maintaining the status quo is needed to prevent Lyft from losing the “fruits of a meritorious appeal.” 7 (Food and Grocery Bureau of Southern Cal. v. Garfield (1941) 18 Cal.2d 174, 177 (Garfield).) 8 Courts consider whether “substantial questions” are raised on appeal (Deepwell Homeowners’ 9 Protective Assn. v. City Council of Palm Springs (1965) 239 Cal.App.2d 63, 67), and “the respective 10 rights of the litigants, which contemplates the possibility of an affirmance of the decree as well as 11 of a reversal.” (Garfield, supra, 18 Cal.2d at p. 177.) 12 Garfield is instructive. There, a preliminary injunction enjoined defendant drug stores from 13 issuing “trading stamps,” a form of coupons or customer loyalty credits, as a likely violation of the 14 unfair competition laws. The California Supreme Court entered a discretionary stay pending appeal 15 because the defendant’s “merchandising practice” was “one of long standing,” and “[n]o doubt its 16 abrupt abolishment would cause disruption in the orderly conduct of his business and a loss of 17 patronage and customer goodwill.” (Garfield, supra, 18 Cal.2d at pp. 176, 178.) Plaintiff’s 18 complaints about the continuing alleged harm during the appeal were given “no weight in view of 19 the many years of delay in instituting this proceeding.” (Ibid.) Here, as in Garfield, without a stay 20 pending appeal, the injunction would “abrupt[ly]” “cause disruption” in Lyft’s “long-standing” 21 business model—which has served millions of Californians since 2012—resulting in a loss of 22 “patronage and customer goodwill.” (Garfield, supra, 18 Cal.2d at p. 178; see also Goodall v. Brite, 23 (1934) 1 Cal. 2d 583, 584-586 [staying preliminary injunction as a matter of discretion because “the 24 conduct of the [defendant] appears to be one of long standing,” and injunction “would cause 25 interruption and perhaps confusion in the [defendant’s] organization and conduct”].) 26 Absent a stay, Lyft would have to immediately suspend operation of its rideshare platform 27 in California. Lyft cannot comply with the injunction at the flip of a switch. (Declaration of 28 Christopher Sholley (Aug. 11, 2020) (“Sholley Decl.”) ¶ 3.) Reclassifying self-employed drivers Case No. CGC-20-584402 -14LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 would be a significant challenge in the best of times, and in the current pandemic environment, Lyft 2 simply does not have the infrastructure to shift to an employment model on demand. (Ibid.) As 3 detailed by Lyft’s declarants, to comply with the injunction, Lyft would need to overhaul its 4 operations in California, including hiring, onboarding, and then supervising thousands of drivers as 5 employees; launch new software and processes to manage a system of scheduled shifts; implement 6 new means to supervise drivers and evaluate their performance, including by hiring hundreds or 7 thousands of new supervisors; and find ways to address matters that range from payroll to benefits 8 and reporting. 3 (Singla Decl., ¶¶ 8-9, Ex. F at ¶ 47, Ex. G at ¶¶ 20-22.) Lyft would also face 9 economic pressure to reduce the number of drivers it allows onto the platform (Singla Decl., ¶ 8, 10 Ex. F at ¶ 38). As the Maplebear court explained in staying a similar injunction, “it would be unwise 11 to make [the defendant] do a bunch of things that it can’t later unwind.” (Singla Decl. ¶ 5, Ex. C at 12 p. 13:7-9.) This evidence shows that, if anything, the case for stay here is stronger than it was in 13 14 Garfield. Garfield ended just one customer loyalty program at drug stores, but Lyft’s entire rideshare 15 business model in California is at risk without a stay pending appeal. (See Singla Decl., ¶ 8, Ex. F 16 at ¶¶ 30-42.) Moreover, unlike in Garfield, immediate implementation of the injunction would cause 17 widespread harm to non-party drivers and riders all across California, depriving many of an 18 opportunity to flexibly earn income in a time of economic uncertainty, and depriving others of a 19 convenient way to find rides to access important services such as healthcare appointments. (Singla 20 Decl., ¶ 8, Ex. F at ¶¶ 33, 45-46, 48; Independent Drivers’ Alliance Amicus Br. (July 31, 2020), pp. 21 4-6.) 22 Lyft’s appeal raises “substantial issues” that further counsel in favor of a stay pending 23 24 25 26 27 28 3 Multiple courts have recognized that worker reclassification requires significant business restructuring and constitute irreparable harm. (See Olson v. California (C.D. Cal. Feb. 20, 2020) 2020 WL 905572, at *14 [“If the ABC test is found to require the reclassification of their drivers, Uber and Postmates would also suffer significant harms associated with restructuring their businesses.”]; California Trucking Association v. Becerra (S.D. Cal. 2020) 433 F.Supp.3d 1154, 1170 [trucking companies stand to suffer irreparable harm under AB5 by having to “significantly restructure their business model, including by obtaining trucks, hiring and training employee drivers, and establishing administrative infrastructure compliant with AB-5”].) Case No. CGC-20-584402 -15LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL 1 appeal. (Estate of Murphy (1971) 16 Cal.App.3d 564, 568-569.) No California appellate court has 2 considered whether rideshare drivers qualify as employees under Dynamex and A.B. 5, and none 3 has ruled on the propriety of an injunction like the one entered by this Court. That uncertainty alone 4 weighs strongly in favor of a stay, as the Maplebear court recognized. (Singla Decl. ¶ 4, Ex. B, p. 5 5 [“the sooner the Court of Appeal can hold forth on these issues, the sooner the parties will have a 6 clear and definite signal of what is expected of them”].) 7 Finally, given the significant harm to Lyft and drivers that the injunction portends, and the 8 novelty and uncertainty of the legal issues involved, any enforcement proceedings is likely to 9 entangle the Court in complex questions regarding what the injunction actually requires even as the 10 Court of Appeal’s review is pending. Plaintiff has pointedly declined to offer concrete details on 11 how it believes the injunction would operate with respect to Lyft’s platform operations. As the 12 Maplebear court found, the prospect of such complex enforcement proceedings is yet another reason 13 to enter a discretionary stay pending appeal. (Singla Decl. ¶ 6, Ex. D, p. 4.) 14 IV. AN ADMINISTRATIVE STAY PENDING WRIT PETITIONS IS WARRANTED. 15 At a minimum, the Court should extend its 10-day stay until after Lyft has exhausted its 16 effort to obtain a stay of the injunction pending appeal through a writ of supersedeas or other 17 appellate process. Lyft expects to file a writ within three business days of an order denying a stay 18 by this Court. 19 V. CONCLUSION 20 For all of the foregoing reasons, the Court should enter an order STAYING the preliminary 21 injunction pending Lyft’s appeal. 22 23 24 DATED: August 12, 2020 MUNGER, TOLLES & OLSON LLP 25 26 27 By: Rohit Singla Attorney for Defendant Lyft, Inc. 28 Case No. CGC-20-584402 -16LYFT’S EX PARTE APPLICATION FOR STAY PENDING APPEAL