{"id":3028,"date":"2026-06-24T15:05:13","date_gmt":"2026-06-24T19:05:13","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=3028"},"modified":"2026-06-24T15:05:14","modified_gmt":"2026-06-24T19:05:14","slug":"california-federal-court-grants-in-part-and-denies-in-part-workdays-motion-to-dismiss-in-mobley-v-workday","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2026\/06\/24\/california-federal-court-grants-in-part-and-denies-in-part-workdays-motion-to-dismiss-in-mobley-v-workday\/","title":{"rendered":"California Federal Court Grants In Part And Denies In Part Workday\u2019s Motion To Dismiss In Mobley v. Workday"},"content":{"rendered":"
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By Gerald L. Maatman, Jr., Adam D. Brown, and Elizabeth G. Underwood<\/strong><\/p>\n\n\n\n

Duane Morris Takeaways<\/em><\/strong>: In the closely watched AI-related litigation entitled Mobley, et al. v. Workday, Inc., No. 23-CV-00770 (N.D. Cal. June 22, 2026) (ECF No. 360), Judge Rita F. Lin of the U.S. District Court for the Northern District of California issued an order <\/a>denying in part and granting in part Workday\u2019s motion to dismiss.\u00a0 The Court denied Workday\u2019s motion to dismiss Plaintiffs\u2019 California Fair Employment and Housing Act (\u201cFEHA\u201d) claims, holding that Plaintiffs adequately alleged a nexus to California because Workday allegedly designs, develops, and operates its algorithmic screening tools from its California headquarters.\u00a0 Id. at 3-4.\u00a0 The Court also denied the motion as to one of the plaintiffs\u2019 Americans with Disabilities Act (\u201cADA\u201d) claim, determining that her new proxy-discrimination factual allegations fell within the scope of a prior order granting leave to amend to address certain deficiencies in a prior iteration of Plaintiffs\u2019 Complaint, despite Workday\u2019s argument to the contrary.\u00a0 Id. at 8.\u00a0 However, the Court granted Workday\u2019s motion to dismiss as to Plaintiff Rowe\u2019s newly asserted race-based disparate impact claim because Rowe did not seek leave to add a race-based claim, and therefore Rowe could not add this claim to the Third Amended Complaint (\u201cTAC\u201d).\u00a0 Id. at 9.<\/em><\/p>\n\n\n\n

For employers and AI vendors defending against AI employment discrimination claims, this decision provides important guidance on how defendants can successfully move to strike unauthorized claims and legal theories that exceed the scope of court-granted leave to amend.<\/em><\/p>\n\n\n\n

This development follows the Court\u2019s previous Discovery Order, which we blogged on <\/em>here<\/em><\/a>, Workday\u2019s unsuccessful Motion to Dismiss Plaintiff\u2019s Amended Complaint, which we blogged about <\/em>here<\/em><\/a>, Workday\u2019s first successful Motion to Dismiss, which we blogged on <\/em>here<\/em><\/a>, and the EEOC\u2019s amicus brief filing, which we blogged about <\/em>here<\/em><\/a>.<\/em><\/p>\n\n\n\n

Case Background<\/strong><\/p>\n\n\n\n

Plaintiffs Derek Mobley, Jill Hughes, Sheilah Johnson-Rocha, and FaithLinh Rowe brought this action against Workday, alleging that Workday\u2019s algorithm-based applicant screening tools discriminated against them and other similarly situated job applicants based on race, age, and disability.  Id.<\/em> at 1.  After the Court ruled on two rounds of motions to dismiss, Mobley proceeded on claims for disparate impact discrimination based on race under Title VII, disability under the ADA, and age under the ADEA.  Id.<\/em> at 1-2.<\/p>\n\n\n\n

On November 12, 2025, Mobley sought leave to file a further amended complaint adding three new named plaintiffs and claims for sex-based discrimination under Title VII and sex-based, race-based, and age-based discrimination under the FEHA.  Id.<\/em> at 2.  The Court found good cause for the late amendment under Federal Rules of Civil Procedure 15 and 16.  Id.<\/em>  Workday moved to dismiss the resulting Second Amended Complaint (\u201cSAC\u201d), and the motion was granted in part and denied in part.  Id.<\/em>  Plaintiffs were given leave to remedy deficiencies in their FEHA claims, which lacked allegations of a nexus to California, and Hughes was given leave to amend her ADA claim.  Id.<\/em>  Plaintiffs then filed a TAC.  Id.<\/em><\/p>\n\n\n\n

Subsequently, Workday filed a motion to dismiss and to strike portions of the TAC, arguing Plaintiffs\u2019 FEHA claims failed to plead a non-conclusory nexus between the alleged misconduct and California, and that the other amendments were unauthorized because they fell outside the scope of Plaintiffs\u2019 leave to amend.  Id.<\/em> at 1.<\/p>\n\n\n\n

The Court\u2019s Decision<\/strong><\/p>\n\n\n\n

The decision addressed several issues.<\/p>\n\n\n\n

Plaintiffs\u2019 FEHA Claims Were Plausibly Asserted<\/em><\/p>\n\n\n\n

First, the Court denied Workday\u2019s motion to dismiss the FEHA claims, finding that Plaintiffs sufficiently alleged that Workday, whose principal place of business is in California, participated in the alleged misconduct from its California headquarters.  Id.<\/em> at 3.  The TAC alleged that Workday\u2019s tools were \u201cdesigned, developed, maintained, and controlled from [Workday’s] California headquarters\u201d and that the \u201cscreening, scoring, and rejection\u201d of Plaintiffs\u2019 applications \u201coriginate[d] in and [was] carried out from California.\u201d  Id.<\/em> at 4.  The Court reasoned that the TAC adequately alleged \u201cmaterial participation in the allegedly unlawful discriminatory employment decisions by an actor (Workday, through its algorithmic decision-making tools) in California.\u201d  Id.<\/em><\/p>\n\n\n\n

The Court rejected Workday\u2019s argument that its liability as an agent under the FEHA must turn on the liability of its customers, relying on the California Supreme Court\u2019s decision in Raines v. U.S. Healthworks Medical Grp.<\/em>, 534 P.3d 40 (Cal. 2023).  Id.<\/em>  Under Raines<\/em>, Workday is not subject to derivative liability based on its employer-customer\u2019s liability but instead \u201cis directly liable for its \u2018own engagement in FEHA-regulated activities on the employer’s behalf.\u2019\u201d  Id.<\/em> (quoting Raines<\/em>, 534 P.3d at 53).<\/p>\n\n\n\n

The Court also rejected Workday\u2019s contention that applying the FEHA to its California-based conduct would amount to an impermissible extraterritorial application, reasoning that wrongful conduct within California\u2019s borders is not properly understood as \u201cextraterritorial\u201d regardless of where an aggrieved worker resides.  Id.<\/em> at 5-7.<\/p>\n\n\n\n

Plaintiff Hughes\u2019s Amended ADA Claim Was Permissible<\/em><\/p>\n\n\n\n

Second, the Court denied Workday\u2019s motion as to the permissibility of Plaintiff Hughes\u2019s ADA claim.  Id.<\/em> at 8.  The TAC alleged that \u201calgorithmic hiring tools can identify and rely upon [ ] proxy indicators of illness or health-related limitations\u201d such as \u201cmedical-related leave, or patterns consistent with treatment and recovery,\u201d and \u201ccan disproportionately flag and screen out such applicants based on inferred health status rather than job-related qualifications.\u201d  Id.<\/em>  The Court rejected Workday\u2019s argument that the Court had not authorized new theories of proxy discrimination for physical disabilities, reasoning that the additional allegations were squarely within the scope of the leave to amend.  Id.<\/em><\/p>\n\n\n\n

Plaintiff Rowe\u2019s Race-Based Disparate Impact Claim Was Dismissed<\/em><\/p>\n\n\n\n

Third, the Court dismissed Plaintiff Rowe\u2019s race-based disparate impact claim under Title VII, which sought for the first time to assert discrimination based on her race as an Asian American.  Id.<\/em> at 9.  The Court reasoned that the Second Amended Complaint did not contain such a claim and that Plaintiffs had not previously sought or received authorization to add the claim, as the prior race-related allegations were limited to African American and Black applicants.  Id.<\/em><\/p>\n\n\n\n

Plaintiffs\u2019 Direct-Employer Theory Was Stricken<\/em><\/p>\n\n\n\n

Finally, the Court dismissed Plaintiffs\u2019 new legal theory that Workday is liable as an employer because it used the challenged recruitment and hiring procedures in screening and selecting its own employees, explaining that this legal theory was unauthorized.  Id.<\/em> at 10.<\/p>\n\n\n\n

Implications For Employers<\/strong><\/p>\n\n\n\n

This decision highlights that companies developing and operating AI-driven hiring tools in and\/or from California may be subject to the FEHA for their own California-based conduct, even when the affected applicants reside and apply for jobs out of state.<\/p>\n\n\n\n

Moreover, the Court\u2019s treatment of the amendments to the complaint underscores the importance of carefully observing the scope of court-granted leave to amend.  While the Court permitted new proxy-discrimination allegations supporting an existing ADA claim, the Court dismissed and struck a new race-based theory and a new direct-employer theory that exceeded the scope of the amendments the Court had authorized, illustrating that plaintiffs cannot use amendments to incorporate entirely new claims or theories without leave.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr., Adam D. Brown, and Elizabeth G. Underwood Duane Morris Takeaways: In the closely watched AI-related litigation entitled Mobley, et al. v. Workday, Inc., No. 23-CV-00770 (N.D. Cal. June 22, 2026) (ECF No. 360), Judge Rita F. Lin of the U.S. District Court for the Northern District of California issued an … <\/p>\n

Continue reading “California Federal Court Grants In Part And Denies In Part Workday\u2019s Motion To Dismiss In Mobley v. Workday”<\/span><\/a><\/p>\n","protected":false},"author":575,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[111],"tags":[],"ppma_author":[7,146,149],"class_list":["post-3028","post","type-post","status-publish","format-standard","hentry","category-discrimination"],"authors":[{"term_id":7,"user_id":575,"is_guest":0,"slug":"gmaatman","display_name":"Gerald L. Maatman, Jr.","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/maatmangerald-100x100.jpg","author_category":"","last_name":"Maatman Jr.","first_name":"Gerald L.","job_title":"","user_url":"https:\/\/www.duanemorris.com\/attorneys\/geraldmaatman.html","description":"Read Gerald's bio.<\/a>"},{"term_id":146,"user_id":741,"is_guest":0,"slug":"adbrown","display_name":"Adam Brown","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2025\/08\/brownadam-100x100.jpg","author_category":"","last_name":"Brown","first_name":"Adam","job_title":"","user_url":"https:\/\/www.duanemorris.com\/attorneys\/adambrown.html","description":"Read Adam's bio.<\/a>"},{"term_id":149,"user_id":744,"is_guest":0,"slug":"eunderwood","display_name":"Elizabeth Underwood","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2025\/10\/underwoodelizabeth-100x100.jpg","author_category":"","last_name":"Underwood","first_name":"Elizabeth","job_title":"","user_url":"https:\/\/www.duanemorris.com\/attorneys\/elizabethunderwood.html","description":"Read Elizabeth's bio."}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/3028","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/575"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=3028"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/3028\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=3028"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=3028"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=3028"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=3028"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}