Ruling in a separate suit by drivers who challenged Uber’s system of background checks, the Ninth U.S. Circuit Court of Appeals in San Francisco said they were bound by arbitration agreements in contracts they signed with the company in order to keep working.
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Under the terms of the proposal, Uber would no longer be able to terminate drivers at will and would have created appeals panels for drivers who feel they have been terminated unjustly. Or, it could walk away from negotiations altogether, confident that the vast majority of driver disputes would be left to arbitration.
On Wednesday, the Ninth Circuit ruled that Uber’s arbitration clause holds, in effect substantially reducing the class size in both cases to the small percentage of drivers who opted out of them. If you would like to discuss another topic, look for a relevant article. A federal judge on Thursday, Aug. 18, 2016, rejected a legal settlement that would have divided up to $100 million among about 380,000 Uber drivers to resolve claims the ride-hailing service has been exploiting them by treating them as independent contractors instead of employees. Uber had agreed to pay up to $100 million to settle the expense reimbursement lawsuit. Uber drivers have used the threat of a class-action lawsuit to extract concessions from the San Francisco company. Uber lawyer Theodore Boutrous applauded the decision. “We’ve always believed our optional arbitration agreements should have applied in this case, and we’re pleased with the court’s decision today”. Shannon Liss-Riordan, the attorney representing the drivers in the classification suit, last month said such a ruling likely would bring the class size down to a few thousand drivers.
“We do still have the possibility of the PAGA penalties (which are mostly for the state of California), and we have more than 1,500 Uber drivers signed up in California to pursue individual arbitrations if necessary”, Liss-Riordan said in her statement.
The ruling, if it stands, would also apply to the larger suit by drivers in California and MA who claim Uber misclassified them as independent contractors rather than employees, thus denying them minimum wages, overtime pay, meal and rest breaks, workers’ compensation and other employment benefits.
If the drivers went to trial and proved their employment status, Chen said, the penalties under state law could amount to $1 billion or more, with 75 percent going to the state and the rest to the drivers.
The appeals court, however, said the drivers could not be forced to arbitrate claims brought under a unique California law that allows plaintiffs to sue for labor law violations on behalf of the state.
The agreement would have required Uber to pay at least $84 million to drivers in California and MA who had been picking up riders who requested them through the company’s service dating back to August 2009.
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U.S. District Judge Edward Chen previously ruled that the arbitration agreements were unenforceable and unconscionable. Uber has since revised its driver contracts, allowing it to smother similar challenges in Arizona, Ohio, Florida and Maryland, with federal judges in those states upholding its arbitration requirements this year. The company also faces lawsuits over its pricing and business practices, as well as efforts by local regulators to force it to comply with laws covering taxis.
