OLYMPIA, Wash. (Legal Newsline) - Instacart and the Washington Food Industry Association can proceed with a lawsuit challenging a Seattle ordinance that ordered “hazard pay” for food delivery workers during the Covid-19 epidemic but exempted Uber and Lyft drivers, grocery store employees and other front-line workers with similar risks of contracting the disease.
Instacart accused the Seattle City Council of passing the ordinance to curry favor with labor unions including the Teamsters, using Covid as a pretext. The Washington Supreme Court partially agreed, allowing the plaintiffs to continue in court with claims the “gig economy” ordinance exceeded Seattle’s police powers and violated Instacart’s contract and property rights under the U.S. and Washington Constitutions.
In June 2020, the Seattle City Council passed the “Premium Pay for Gig Workers” ordinance, requiring Instacart and other platforms to pay delivery workers an extra $2.50 for their first stop and $1.25 for each additional stop in Seattle. It also prohibited them from reducing the size of their delivery areas in Seattle, cutting payments to gig workers or adding customer charges for delivery.
Instacart and WFIA sued to block the ordinance and collect damages, arguing the ordinance was arbitrary and capricious and violating 82.84 RCW, which prohibits local governments collecting “any tax, fee, or other assessment on groceries.” A trial judge dismissed the claim based on the grocery-tax law but allowed the rest to proceed.
The Washington Supreme Court agreed to hear an appeal, and in a divided Feb. 9 opinion, largely upheld the trial court but dismissed the claims based on equal protection and privileges and immunities. Only one other justice signed off on the opinion by Justice Raquel Montoya-Lewis, while the rest concurred in parts of the opinion and dissented in others.
The Supreme Court started by unanimously rejecting Instacart’s claim the ordinance violated the state ban on local grocery taxes.
“The city’s premium pay ordinance does not impose a tax on groceries,” the court ruled. “It requires food delivery network companies to pay their workers, and the money flows directly to those workers, not to the government or the general public.”
Instacart also argued the ordinance violated the Equal Protection Clause by awarding higher pay to delivery drivers when they faced no higher risks than restaurant and grocery employees, ride-hailing drivers and other essential workers. But equal protection isn’t an excuse for courts questioning the judgment of legislators, the Supreme Court ruled; Seattle might have good reason for encouraging food delivery services as a way to keep people from leaving their homes during an epidemic.
Instacart fared better on its takings clause argument. “Intangible property rights, including valid contracts, are protected by the takings clause,” the court ruled. “Instacart may be able to prove a set of facts that demonstrates the ordinance interferes with its economic interests to a degree that amounts to a taking.”
Justice Charles Johnson concurred, joined by justices Susan Owens and Mary Yu. He wrote separately in support of the claim that Seattle violated its police powers when it passed the ordinance. Instacart argued the ordinance was a political favor to special interests seeking to regulate the “gig economy.” The plaintiffs claimed the city council had a close working relationship with Working Washington and union leaders, as evidenced by the fact the council removed transportation workers at the behest of the Teamsters.
“Their exclusion from the ordinance appears arbitrary and undermines the legitimacy of the legislation since drivers transporting passengers are more vulnerable to COVID-19 than drivers transporting groceries,” Justice Johnson wrote.
“Perhaps if the ordinance imposed masking requirements, distancing restrictions, cleanliness practices, or any more typical public health suggestions, a stronger connection would exist,” he wrote. “The ordinance adopts none of these protections—it primarily alters pay.
Justice Debra Stephens also concurred, but dissented on the dismissal of claims based upon the Privileges and Immunities Clause, saying “the right to carry on business in Washington is a fundamental right of state citizenship that triggers an independent privileges and immunities analysis.”