Instacart Wins Appeal in Fight Over Gig-Economy Rule

2 minute read | April.11.2023

Instacart and its co-plaintiff, the Washington Food Industry Association, recently won a precedent-setting victory in the Washington Supreme Court. Represented by a cross-practice team at Orrick, the company secured a decision that will allow it to proceed with constitutional challenges to a Seattle ordinance targeting food delivery network companies in the gig economy.

The Context

Seattle passed an ordinance in 2020 requiring Instacart and other food delivery gig-economy companies to give drivers who used their platform hazard pay during the COVID-19 pandemic. The ordinance also prevented Instacart and other platforms from passing on the costs to customers or modifying service areas in response to the ordinance.

Even before the ordinance, Instacart had taken many steps to protect drivers and ensure an adequate supply of drivers. The company provided free personal protective equipment to drivers and offered sick pay to drivers who contracted COVID-19. It also introduced cashless payment to minimize person-to-person contact. These steps led to a surge in drivers using the platform – as did increased pay that reached over $30 per hour.

The Case

The standard for striking down emergency legislation ostensibly aimed at protecting health and safety is quite high, but Instacart was unwilling to roll over when faced with an unprecedented incursion into its business operations. Instacart challenged the ordinance in Washington state court, arguing that Seattle overstepped its police power; that the ordinance was aimed at regulating the gig economy rather than protecting health and safety; and that the City had unconstitutionally seized Instacart’s property and altered its existing contracts.

The Unusual Development

The trial court denied Seattle’s motion to dismiss Instacart’s constitutional claims. The court recognized the unique nature of the ordinance and concluded that Instacart’s pleadings stated viable legal claims, which Instacart was entitled to develop through factual discovery.

The City immediately sought to overturn that decision, arguing that courts should defer to economic legislation, especially during a public health emergency. It first asked the trial court to reconsider.

When that didn’t work, it asked the Washington Supreme Court to take the highly unusual step of skipping the ordinary appeals process for a hearing in the high court. That gambit worked, and the parties headed immediately to the state Supreme Court. Instacart argued that the Seattle ordinance targeted the gig economy – not health and safety – and intruded into Instacart’s business operations. The Washington Supreme Court ruled largely in Instacart’s favor. The Court agreed with the trial court that the unique nature of the ordinance, combined with the many steps Instacart had taken to address the pandemic, called into question the ordinance’s stated justifications, and that Instacart had alleged sufficient facts to pursue its most significant claims.

The Future

The case now goes back to the trial court, where Instacart is entitled to the discovery that has been delayed for years.

The Team

The Orrick team representing Instacart includes: Rob McKennaDan DunneDaniel Rubens, Ben Aiken, and Emily Luken