Welcome

Uber Can Argue Prop 22 Is Retroactive in California Class Suit

June 18, 2021, 1:22 AM

Uber Technologies Inc. can challenge a lawsuit alleging the company misclassified California drivers as independent contractors by arguing that a recently enacted ballot initiative is retroactive, a San Francisco judge said Thursday.

The U.S. District Court for the Northern District of California certified a class of more than 4,800 Uber drivers who allege they were wrongly classified as independent contractors under Assembly Bill 5, the state’s strict worker status rule.

Judge Edward M. Chen granted Uber’s motion to amend its reply to include Proposition 22, a ballot initiative approved by voters in November, which excludes ride-share and delivery drivers from the requirements of A.B. 5.

Uber seeks to add two defenses—that Proposition 22 presents a defense to independent contractor claims arising after its enactment, and that the class’ claims for the period before its enactment are abated under the new rule.

“Uber is essentially formalizing an argument everyone has known is at issue since the election,” the company said in an April brief.

In certifying the class, Chen initially ruled that Proposition 22 didn’t apply retroactively, and therefore only served to limit the class period and foreclose damages after the law went into effect. He walked back that ruling in April, agreeing with Uber that the retroactive application of the rule is ultimately a merits question that shouldn’t be decided in the context of class certification.

The class urged Chen to deny Uber’s motion to add the new defenses, arguing the motion is unreasonably delayed, would require them to re-conduct discovery, and is ultimately futile.

VIDEO: App-based companies and governments are at odds over how to properly classify gig economy workers.

Proposition 22 doesn’t contain an express statement of retroactivity or any language that hints it was intended to be retroactive, the class said. The class is prepared to file for summary judgment on August 12, and if granted, the amendment could cause undue delay, it said.

Allowing Uber to amend its answer to add the Proposition 22 defense “is in the interest of justice because it will allow the parties and the Court to properly address the applicability of Proposition 22 to this case,” Chen wrote Thursday. The question of whether Proposition 22 applies retroactively must be addressed on the merits at a later stage, Chen said in allowing Uber’s abatement defense to move forward.

Lichten & Liss-Riordan PC represents the class. Gibson, Dunn & Crutcher LLP represents Uber Technologies Inc.

The case is James v. Uber Techs. Inc., N.D. Cal., No. 3:19-cv-06462, 5/27/21.

To contact the reporter on this story: Maeve Allsup in San Francisco at mallsup@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

To read more articles log in. To learn more about a subscription click here.