## Facts

- The Attorney General and several city attorneys brought a civil enforcement action against Uber Technologies, Inc. and Lyft, Inc. alleging systematic misclassification of California drivers as independent contractors.
- The enforcement claims were brought under the Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.) and AB 5, which codified the Dynamex “ABC test” and authorized public officials to seek injunctive relief for misclassification.
- AB 5 presumes worker employee status unless the hiring entity proves: (A) lack of control; (B) work outside the usual course of the hiring entity’s business; and (C) the worker’s independent trade.
- The People sought a preliminary injunction barring continued misclassification and requiring driver classification as employees.
- The People submitted driver declarations describing harms from misclassification, including loss of statutory wage protections and employment benefits.
- Uber and Lyft opposed with evidence that immediate reclassification would cause significant operational disruption and financial harm.
- The superior court granted a preliminary injunction, finding a strong likelihood of success—especially that defendants could not satisfy ABC test prong B—and that the balance of harms and public interest favored interim relief.
- Uber and Lyft appealed the preliminary injunction.

## Issues

1. Whether the trial court abused its discretion in granting a preliminary injunction in a public enforcement action under AB 5 and the UCL.
2. Whether the trial court correctly found the People were likely to succeed on the merits, particularly regarding ABC test prong B (whether drivers perform work outside defendants’ usual course of business).
3. Whether the trial court properly weighed interim harms and the public interest in issuing injunctive relief.

## Decision

- The Court of Appeal affirmed the order granting a preliminary injunction, with minor modifications not central to the analysis.
- The court held the trial court did not abuse its discretion in finding the People likely to succeed on the merits under AB 5.
- The court agreed there was a strong showing that drivers perform work within Uber’s and Lyft’s usual course of business, making it unlikely defendants could satisfy prong B.
- The court held the trial court properly applied California’s equitable, sliding-scale approach to preliminary injunctions and reasonably weighed harms and public interest in favor of interim relief.

## Legal Principles

- Under AB 5’s codified ABC test, a worker is presumed an employee unless the hiring entity proves all three prongs (A), (B), and (C).
- For preliminary injunctions, California applies an equitable sliding-scale analysis: the required showing on interim harm varies inversely with the strength of the showing on likelihood of success.
- In public enforcement actions, the public interest is a substantial factor in the injunction analysis, including enforcement of labor protections and prevention of unfair competitive effects from alleged statutory violations.
- In assessing “usual course of business” for ABC test prong B, courts may look to the functional economic reality of how the business operates, not merely the company’s characterization of itself as a technology platform.

## Conclusion

The Court of Appeal upheld preliminary injunctive relief requiring Uber and Lyft to treat drivers as employees for purposes of AB 5, concluding the People showed a strong likelihood of success—particularly because ride-hailing drivers plausibly perform work within defendants’ usual course of business—and that the trial court acted within its discretion in weighing interim harms and the public interest.


People v. Uber Techs., Inc., 56 Cal. App. 5th 266, 270 Cal. Rptr. 3d 290 (Ct. App. 2020)