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Uber, Lyft Court Filing Marks New Justice Dept. Initiative

Nov. 6, 2017, 7:23 PM

By Liz Crampton and Jon Steingart, Bloomberg BNA

Uber and Lyft have a new supporter in their argument against a Seattle law that lets ride-hail drivers join unions: the federal government.

Seattle’s ordinance would violate federal law against price fixing, the Federal Trade Commission and Department of Justice say in an amicus brief.

The government brief, filed late Nov. 3, represents a new initiative of Assistant Attorney General Makan Delrahim to get the government involved in private antitrust litigation.

Delrahim, who assumed office about one month ago, wants to boost the DOJ’s appellate program, he told Bloomberg Law. “We will seek opportunities in courts to advocate for the proper application of the antitrust laws and express our strong views that new state or local laws should not restrict entry by more efficient technologies which create competition and lower prices to the benefit of American consumers,” he said.

“We would welcome invitations from private parties and the courts to express our views on new rules that would tend to inhibit competition from new technologies,” he said.

Uber appeared to welcome the help. “The DOJ and FTC make clear and strong arguments that the City of Seattle is not immune from the federal antitrust laws,” Brooke Steger, general manager for Uber in the Pacific Northwest, said in a statement emailed to Bloomberg Law Nov. 3. “We look forward to resolving this issue and continuing to provide earning opportunities and safe, reliable and affordable transportation options to all Seattle-area residents and visitors.”

Seattle will address the DOJ’s arguments as it proceeds with the appeal, Mike Ryan, an assistant city attorney, told Bloomberg Law by email Nov. 6. “The city looks forward to defending this publicly important law on appeal,” he said.

Union Rights for Gig Workers

The ordinance is the first of its kind in the country to extend union rights to drivers classified as independent contractors.

Enacted in 2015, it’s been on hold while consolidated challenges filed by the U.S. Chamber of Commerce, Uber Technologies Inc., Lyft Inc., and the National Right to Work Foundation proceed in court. They are appealing a federal judge’s ruling that upheld the law.

“Antitrust law forbids independent contractors from collectively negotiating the terms of their engagement,” the government says. Working together to set fees “is price fixing” that strikes “at the very core of the harms the antitrust laws seek to address,” the government says.

The Sherman Antitrust Act prohibits anti-competitive business conduct by barring collusion on prices. But it doesn’t restrict anticompetitive conduct carried out under state supervision, which is known as a “state action defense.”

The Seattle City Council enacted the ordinance under the authority of a Washington state law that allows local jurisdictions “to regulate for hire transportation services without liability under federal antitrust laws,” a lower court said Aug. 1. As a result, the state action defense means the city ordinance isn’t preempted by the Sherman Act, the court ruled in upholding the law.

The DOJ and FTC agree that the state law governs how transportation services are provided to customers, but they say the city ordinance affects how drivers engage with ride-hailing companies. The state law authorizes Seattle to regulate consumer concerns such as price and safety, but not terms under which the companies engage drivers, such as how much they earn, the federal agencies say.

Other groups filing amicus briefs against the ordinance include business and trade associations and antitrust law professors. Briefs from the city and amici supporting the ordinance are due in a few weeks.

The case is: Chamber of Commerce of the U.S. v. City of Seattle, 9th Cir., No. 17-35640, amicus brief 11/3/17