California isn't just the birthplace of AI, social media, and the technologies reshaping daily life—it's also where the legal fights over those technologies are being written in real time. The state's courts have long served as a proving ground for novel legal theories, and 2026 is no exception: a wave of new lawsuits is testing exactly how far companies can go in deploying artificial intelligence before the law steps in.
In recent weeks, plaintiffs have sued over AI tools used to set gas prices, defeated an attempt to dismiss a case over hiring algorithms accused of screening out job applicants, and gone after a ride-sharing giant's leadership for allegedly failing to stop sexual assault and harassment by its drivers.
These cases follow a wave of new California laws regulating artificial intelligence—covering everything from data privacy to automated decision-making—across employment, health care, social media, and education. Below is a breakdown of the most significant recently filed cases and the arguments plaintiffs are making against tech companies and the businesses that rely on their AI tools.
Key Takeaways
- California's Cartwright Act now explicitly bans "common pricing algorithms" used to fix prices, following the passage of Assembly Bill 325—one of the toughest state-level algorithmic pricing laws in the country.
- Three California drivers are suing Kalibrate and more than a dozen major gas station brands—including Marathon, 7-Eleven, BP, Walmart, and Circle K—alleging AI-driven software coordinated fuel prices statewide.
- New California employment regulations, effective since October, make it illegal to use AI hiring tools that result in discrimination, and require employers to retain automated decision-making data for four years.
- A federal judge let key claims proceed in Mobley v. Workday, a closely watched case testing whether AI vendors—not just employers—can be held liable for discriminatory hiring algorithms.
- Uber shareholders filed a derivative suit against the company's board and executives, alleging years of lax compliance allowed sexual assault and harassment claims by drivers to multiply.
Algorithms and Antitrust: California's Toughest-in-the-Nation Law
The Cartwright Act, California's antitrust law, is widely regarded as one of the toughest in the nation. Under the U.S. Supreme Court's 1977 decision in Illinois Brick Co. v. Illinois, only direct purchasers of goods and services can sue over antitrust violations in federal court. California law goes further, allowing anyone injured by anticompetitive conduct to sue in state court—regardless of whether they dealt directly with the company accused of the violation.
Last year, the state legislature passed, and Gov. Gavin Newsom signed, Assembly Bill 325, amending the Cartwright Act to make it illegal in California to "use or distribute a common pricing algorithm as part of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce." The law took effect Jan. 1 and made it substantially easier to sue over algorithmic pricing violations, while companion legislation increased both criminal and civil penalties.
As the law firm Jones Walker noted in a January post on its website, "by explicitly prohibiting 'common pricing algorithms' and dramatically lowering pleading standards, California has created the most comprehensive state-level regulatory framework for algorithmic pricing in the United States. The law will have far-reaching implications for both technology vendors and enterprise users."
Fueling a Lawsuit: Gas Station Giants Accused of AI Price-Fixing
In Casciani v. Knowledge Support Systems, three California drivers allege that Kalibrate and its parent company, Knowledge Support Systems Inc., colluded with more than a dozen companies operating 1,700 gas stations statewide to raise fuel prices through AI-driven pricing technology. Defendants named in the suit include Marathon, 7-Eleven, Speedway, BP, Walmart, Sam's Club, Albertsons, and Circle K.
Kalibrate's software, the suit asserts, uses an algorithm fed by data from competing gas stations to coordinate pricing. The result, plaintiffs allege, is a price-fixing scheme that is "part of the cause of California's astronomical fuel prices."
"Specifically, the gas station defendants have replaced independent, competitive pricing with a coordinated, automated mechanism that relies on sensitive competitor data and a conscious decision to ensure that prices remain artificially high," the plaintiffs said in their complaint. "These acts represent a modern, digital iteration of traditional price-fixing and combination that California law expressly forbids."
By outsourcing pricing decisions to Kalibrate, plaintiffs argue, the gas station operators violated the Cartwright Act through conduct that "constitutes an unlawful trust—a combination of capital, skill, or acts by two or more persons to fix, control, or establish the price of a commodity."
Lawyers from Boston-based Dynamis LLP and New York's Simonsen Sussman filed the suit, seeking unspecified damages. The defense has not yet filed its response.
AI in Hiring: New Employment Protections Take Effect
Antitrust is just one front in California's AI reckoning. In October, the state adopted new regulations governing how companies use artificial intelligence and algorithms in hiring and promotion decisions.
The rules make it illegal for employers to use automated decision-making systems in ways that result in discrimination against individuals protected under state law—a category defined broadly to include any tool that helps or replaces human judgment in hiring. Employers facing allegations will be evaluated on whether they conducted anti-bias testing or took proactive steps to prevent bias. The regulations also require employers to preserve automated decision-making data for four years and expand anti-discrimination protections for job applicants.
The California Civil Rights Council, which develops regulations implementing the state's civil rights laws, said the new rules were necessary given the growing use of automated decision-making in employment. "While these tools can bring myriad benefits, they can also exacerbate existing biases and contribute to discriminatory outcomes," the council said.
An analysis by Paul Hastings noted the regulations "offer a glimpse into how choices made about testing employment decision-making systems—automated or otherwise—can help, or hurt, an employer in litigation." The firm also warned AI vendors they could face liability under the regulations if "an employer delegates an employment decision-making function to the vendor."
Mobley v. Workday: The Case Every Employer Is Watching
AI's role in hiring has already triggered major litigation in California. On June 22, the U.S. District Court for the Northern District of California allowed additional claims to move forward in an employment discrimination lawsuit against Workday, the cloud-based platform businesses use to manage finances, HR, and payroll.
Initially filed in 2023, Mobley v. Workday alleges that the company's AI and algorithm-based applicant screening tools discriminated against job applicants based on race, age, and disability. What makes the case unusual is its target: the technology vendor, rather than the employer doing the hiring.
"For employers and the defense counsel who represent them, Mobley v. Workday is perhaps the most consequential AI-and-employment case currently pending in the United States because of the novel theory advanced, and to this point accepted, by the court," Pittsburgh's Houston Harbaugh recently observed.
U.S. District Judge Rita Lin has repeatedly rebuffed Workday's efforts to dismiss the case. According to Reuters, Lin rejected the company's argument that California's anti-discrimination laws don't apply when it screens applicants located outside California for jobs in other states and countries. Workday told Reuters that the lawsuit's claims are false and that it does not make hiring decisions—in California or anywhere else—on behalf of its customers.
Workday is represented by attorneys from Orrick, Herrington & Sutcliffe. The plaintiffs' litigation is being led by Birmingham, Ala.'s Winston Cooks and the firm Wiggins, Childs, Pantazis, Fisher & Goldfarb.
Uber's Board Faces Shareholder Suit Over Sexual Assault Claims
AI-related cases aren't the only tech litigation stacking up in California courts. On June 22, shareholders sued ride-sharing giant Uber Technologies, along with its board members and executives, in the Northern District of California—alleging the company cut compliance corners that allowed sexual harassment and assault claims against drivers to multiply.
Uber currently faces thousands of federal claims from passengers alleging sexual assault or harassment by drivers, consolidated in the Northern District of California, plus roughly 500 additional state cases consolidated into a Judicial Council Coordination Proceeding in San Francisco County Superior Court.
"Uber is a serial compliance offender," the shareholder suit alleges, claiming that for years the company, its management, and its board pursued growth at any cost—creating a corporate culture that tolerated sexual assault and harassment, discriminated against passengers with disabilities, and overcharged subscribers to its Uber One service. "Despite repeated warnings from inside and outside the company, these remain major issues and represent significant risk and actual harm to Uber and its shareholders," the complaint states.
The shareholders' complaint alleges breaches of fiduciary duty, unjust enrichment, corporate waste, and violations of federal and state securities laws dating back to at least 2017. Because the case is being pursued as a derivative suit, shareholders could collect damages directly from individuals who served as directors or executives.
Directors, the complaint alleges, ignored red flags about consumer protection violations and unsafe practices without taking action to prevent wrongdoing—"ostrich-like" behavior the suit characterizes as a bad-faith breach of fiduciary duty.
The case was filed by attorneys from Scott + Scott on behalf of shareholders led by the Police and Fire Retirement System of the City of Detroit, a pension fund. Uber CEO Dara Khosrowshahi and Board Chairman Ronald Sugar are among the individuals named in the complaint.
What This Means for Businesses Using AI
Taken together, these cases signal that California courts and regulators are no longer treating AI as a novel technology deserving special deference—they're applying existing antitrust, employment, and corporate governance law directly to algorithmic decision-making, often with lower barriers to suit than in other states.
Companies that build, sell, or deploy AI tools for pricing, hiring, or operations should expect California to remain the leading edge of this litigation trend throughout 2026.
Frequently Asked Questions
What is California's Assembly Bill 325? AB 325 amended the Cartwright Act, California's antitrust law, to explicitly make it illegal to use or distribute a "common pricing algorithm" as part of a scheme to fix prices or restrain trade. It took effect January 1, 2026, and lowered the pleading standard for algorithmic pricing lawsuits.
Why is Mobley v. Workday significant? It's one of the first major cases to hold an AI technology vendor—rather than the employer using the tool—potentially liable for discriminatory hiring outcomes, a theory a federal judge has allowed to move forward.
What are California's new AI hiring regulations? Effective October, the rules prohibit employers from using automated decision-making systems that result in discrimination against legally protected groups, and require employers to retain related data for four years.
What is the Uber shareholder lawsuit about? Shareholders allege Uber's board and executives breached their fiduciary duties by failing to address years of sexual assault and harassment complaints against drivers, exposing the company to significant legal and financial risk.