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Uber Class Certification Appeal Blocked

On a previous post, we discussed a class certification appeal by Uber Technologies Inc. ("Uber") in Douglas O'Conner et al. v. Uber Technologies Inc., No. 15-80169 (9th Cir.).

In September 2015, U.S. District Court Judge Edward M. Chen certified a class of workers who alleged Uber misclassified them as independent contractors. The class includes all UberBlack, UberX, and Uber SUV drivers who worked in California any time since August 16, 2009, signed up under individual names, were paid by Uber or an Uber subsidiary, and did not electronically accept any contract with Uber or its subsidiaries unless they timely opted-out of that contract's arbitration agreement. In granting class certification, Judge Chen explained that Uber's claim -- that drivers were all properly classified as contractors -- contradicted its argument that the drivers' experiences with Uber were too different to certify a class. Subsequently, Uber filed an interlocutory appeal, challenging Judge Chen's decision.

The issue of whether Uber's agreements, particularly the ones with arbitration clauses, were enforceable was an argument made by Uber in its appellate brief. Given the California Supreme Court's ruling in Sanchez v. Valencia Holding Co. LLC, 61 Cal. 4th 899, 912 (2015), which found that the standard for unconscionability "must be as rigorous and demanding for arbitration clauses as for any contract clause," the enforceability of Uber's arbitration agreements were open for debate. Uber argued that the named plaintiffs in the case, unlike most class members, were not bound by class action waivers in the arbitration agreements. In response, the drivers contended such argument was irrelevant because even a modicum of procedural unconscionability should be enough to invalidate the agreements. Uber disagreed, asserting its arbitration agreements must be given due consideration and the drivers would need to demonstrate that the agreements were outrageous, unfair or coercive and that they were unable to read or find such agreements. Aside from the issue of whether or not the arbitration agreements were valid, Uber further argued that the potential ramifications of the case were too important to be decided by a single jury. Unfortunately for Uber, the Ninth Circuit refused to review Judge Chen's decision to grant class certification.

The unique nature of jobs in the so-called "sharing economy" challenges traditional employer-employee relationships. Typically, the fundamental issue depends on the level of control an employer has over the work being done. In Uber's case, the drivers and the company have a complex employment relationship. Although Uber controls the rate drivers charge passengers, monitors their performance based on customer ratings, and can even block them from driving for the company, Uber does not tell drivers when, where, or how much they have to work. We will continue to track this case because of its wide-ranging implications for the new business models that have surfaced due to the sharing economy. The case is set to go before a jury on June 20, 2016.

The legal team at SFMS has substantial experience litigating employment matters. If you have any questions regarding this subject or this posting, please contact Chiharu Sekino (csekino@sfmslaw.com) or Alec Berin (aberin@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS also maintains affiliate offices in London, England and Milan, Italy, and is an active member of Integrated Advisory Group (www.iaginternational.org), which provides our firm with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES

Orzeck, K. "9th Circ. Blocks Uber's Class Cert. Appeal In Drivers' Tips Row." Law360. Last modified on November 17, 2015.

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