Uber Workers Are Not Engaged In Interstate Commerce Says The Court.
Can Uber compel mandatory arbitration of disputes with its drivers? To answer this question, the Ninth Circuit in Capriole v. Uber Technologies, No. 20-16030 (9th Cir. 8/2/21) (Wardlaw, Nguyen, Eaton) had to confront whether Uber drivers are exempt from Federal Arbitration Act requirements by virtue of the so-called residual clause or transportation worker exemption in the Federal Arbitration Act. Section 1 of the FAA provides that it does not apply "to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." The emphasized part of the statutory text has been interpreted to apply to transportation workers "engaged in" interstate commerce, truckers being a good example. But Uber drivers are not the same as long-haul truckers.
The Ninth Circuit panel agreed with the district court that Uber workers primarily drive intrastate, not interstate, and therefore do not fall under the exemption to coverage by the FAA. Therefore, pursuant to their arbitration agreement with Uber, the drivers could be compelled to arbitrate pursuant to the FAA requirement that arbitration agreements be enforced.
The panel also agreed, "Plaintiffs' requested injunctive relief -- reclassification as employees -- does not constitute 'public injunctive relief.'" And so the emergency equitable relief requested, which was not public injunctive relief, could not be shoehorned into a California exception to mandatory arbitration.
Thus, the putative class of Uber drivers who sued in Massachusetts to obtain a preliminary injunction prohibiting Uber from classifying drivers in Massachusetts as independent contractors found their lawsuit transferred to the USDC, Northern District of California, pursuant to a forum selection clause. In sum, the Ninth Circuit has affirmed that the drivers do not fall under the FAA exemption, that the preliminary injunction was properly denied, and that arbitration is required.
COMMENT: Judge Wardlaw wrote that the new gig economy has "led to a Dickensian tale of two workforces." On the one side, there are the persons with technical skills able to design and operate the internet platform and who are deemed to be employees with concomitant benefits. "On the other side is a much larger bloc consisting of those who frequently directly transport goods or passengers, the so-called 'gig-economy workers,' most if not all of whom are classified as 'independent contractors,' a status conferring flexibility but little security."
On May 26, 2021, the Guardian newspaper reported, "Uber is to recognise the GMB trade union in the UK for its private hire drivers, marking the first deal between a union and a gig economy ride-hailing service." But this is in the United Kingdom, not the United States. And according to the Wikipedia article on the GMB trade union, "On 28 October 2016, in a landmark ruling if not overturned on appeal, the Central London Employment Tribunal ruled that Uber drivers are 'workers' entitled to the minimum wage, paid holiday, sick leave and other normal worker entitlements, rather than self-employed." In 2021, the ruling that Uber workers are employees was upheld on appeal.
In the United States the courts are deciding whether Uber workers must arbitrate their claims to achieve employment status in the gig economy. And in California, where legal precedent has created an expansive definition of employment, voters approved Proposition 22 to exempt companies such as Uber from having to classify their drivers as employees.
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