Wednesday, September 2, 2015


You likely already know that a group of California Uber drivers has succeeded in having a class certified to bring suit on behalf of Uber drivers in the state for tips and expenses.

While Uber has publicly stated that it intends to appeal (wouldn't you like to be an Uber attorney right now!) this ruling is significant because very, very few class action lawsuits actually get to trial. The time and expense of a class action lawsuit brings even the biggest companies to their knees.

Their lawsuit sought class certification on behalf of 160,000 drivers who have worked for the company in California since 2009. This can be a sizable claim...

Uber has been making the same arguments over and over in different courts, and is finding that, with very few exceptions (particularly in a more labor friendly state such as California) it's model of "independent contractor" is erroneous.

Arguing against class certification, Uber tried to demonstrate that the drivers do not share commonality. This failed.
Share this!

United States District Judge Edward Chen wrote in O'Connor vs. Uber:

"First, to the extent that Uber’s "no typical Uber driver" contention is focused on legally relevant differences between drivers under the Borello test (e.g., whether or not they operate a distinct transportation business), the argument is really a commonality or predominance argument masquerading as a typicality argument: If legally material differences between class members are so substantial that the predominance or commonality tests cannot be satisfied, then the typicality test likely cannot be satisfied either. As discussed below, however, the Court finds that the predominance test is satisfied with respect to the specific class defined above because there are not significant material legal differences between the claims and defenses of the class members and those of the named Plaintiffs."

Uber also tried to convince the court that its drivers really want to be independent contractors based on its survey of about 400 drivers - but the company failed to follow statistically sound methodology and the court called them out on that:

"[N]ot only are the expressed views of these 400 drivers a statistically insignificant sample of the views of their fellow drivers and class members, there is nothing to suggest (and Uber does not contend) that these 400 drivers were randomly selected and constitute a representative sample of the driver population. Nor is there evidence that the responses of these drivers were free from the taint of biased questions. Nothing suggests, for instance, that they were told that were the Plaintiffs to prevail, they might be entitled to thousands of dollars."

Chen also took the company to task for trying to hoodwink him:

"[O]n one hand Uber argues that it has properly classified every single driver as an independent contractor; on the other, Uber argues that individual issues with respect to each driver’s “unique” relationship with Uber so predominate that this Court (unlike, apparently, Uber itself) cannot make a classwide determination of its drivers’ proper job classification."

Though Chen certified the class, he excluded some drivers and limited it to the drivers' claims for tips, not expenses.

Still, this is a very significant ruling that should alert Uber that its model, at least in California, may have to change.

My prediction is that Uber will be the ultimate sharing economy company, because it's going to have to share a lot of its capital with its drivers...

I also predict that the awesome technology that Uber brought to market will actually be successfully adopted by more traditional transportation companies, that eventually there will be "dependent contractor" status as a legal class, and that Uber will shrink away to insignificance after having blazed the trail for others.

Perhaps the company is already realizing this. In its arguments in the case the company describes itself now as providing “lead generation.”

Yes, the company is leading a generation to the realization that, at least presently, there are only two classifications of workers: employees and independent contractor; and that those legal principles have been in place, and have been tested, for many, many years.

No comments:

Post a Comment