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Uber Drivers Lose Virus Sick Pay Bid, Must Arbitrate Claims (2)

May 14, 2020, 9:54 PMUpdated: May 15, 2020, 3:56 PM

A group of Massachusetts-based Uber Technologies Inc. drivers failed Thursday to convince a federal judge in California to immediately reclassify them as employees with paid sick leave due to the Covid-19 pandemic, and must now arbitrate their claims.

Uber and Lyft drivers have repeatedly argued that the companies’ worker classification practices have exacerbated the pandemic and endangered the public, because without the ability to stay home if they’re sick, drivers risk exposing passengers and further spreading the virus.

But even if that’s true, no court has held that these “indirect consequences” warrant a public injunction, Judge Edward M. Chen of the U.S. District Court for Northern California said, noting two recent decisions issued by state and federal courts in a similar suit against Lyft.

The workers’ attorney Shannon Liss-Riordan said she will appeal the decision to the U.S. Court of Appeals for the Ninth Circuit.

“It is hard to believe that these companies can continue to evade the law and deny sick pay to their employees, even in the midst of a global pandemic, by pointing to their arbitration clause,” Liss-Riordan said. “Even the Supreme Court has not sanctioned—or confronted—such a stark situation in which an arbitration clause shields a company from complying with the law and thereby harming the public at large by exacerbating a national health crisis.”

The drivers’ contentions are also “highly controverted” given that forced reclassification might affect their eligibility for paid sick and family leave under the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act, Chen said.

Earlier this month, in a related case, Chen signaled that he was unlikely to grant a sick pay injunction because it might prevent drivers from accessing paid leave granted by the federal emergency laws. Uber subsequently offered drivers in California three days, or 24 hours, of paid sick leave.

“At a time when a record number of employees in the state of California and the country have lost their jobs, we will continue our efforts to keep independent work available to all who want it while raising the standards of that work to better meet the needs of the moment,” Uber said in an email statement.

Drivers Must Arbitrate

John Capriole and two other drivers will also have to individually arbitrate their proposed class action claims that Uber intentionally misclassifies them as independent contractors to avoid paying certain wages, reimbursing business expenses, and providing benefits like paid leave.

The Federal Arbitration Act’s exception for transportation workers doesn’t apply to the drivers here, because they’re not sufficiently engaged in interstate commerce, Chen said. While the drivers say they transport passengers across states lines in New England, the evidence shows that these trips are incidental and rare.

Federal district courts are split on the question of whether gig economy and other drivers should fall under that exception in cases involving Lyft Inc., Grubhub Inc., and Amazon.com Inc. The First, Seventh, and Ninth circuits are poised to decide the question.

The Third Circuit is the only federal appeals court to address the issue with respect to rideshare drivers. But it didn’t directly rule on whether Uber drivers fall under the exception.

Gig companies have eluded a ruling on the merits in worker classification cases seeking wages and other benefits because drivers signed arbitration agreements that keep them from pursuing cases in court.

The U.S. Supreme Court in 2018 upheld the use of class action waivers in such agreements. But the high court’s 2019 ruling in New Prime v. Oliveira put the validity of certain drivers’ arbitration pacts in doubt.

That decision took away the argument that workers labeled as independent contractors can’t benefit from the FAA exception for transportation workers engaged in interstate commerce. It also guaranteed that courts, rather than arbitrators, will decide whether the exception applies to the workers in question.

Capriole’s case against Uber might’ve turned out differently, if he and the other drivers could’ve stayed in Massachusetts federal court. In early March, Judge Indira Talwani granted Uber’s motion to transfer the proposed class action based on a forum selection clause in their driver agreements.

Shortly thereafter, Talwani ruled that Lyft couldn’t force its drivers to individually arbitrate their claims because they’re transportation workers exempt from the FAA. The drivers engage in interstate commerce because they take passengers across state lines, often from Boston’s Logan Airport, she said March 27.

Lichten & Liss-Riordan PC represents Capriole and the proposed class. Gibson, Dunn & Crutcher LLP represents Uber. The company and its attorneys didn’t immediately respond to requests for comment.

For additional legal resources, visit Bloomberg Law In Focus: Coronavirus (Bloomberg Law Subscription).

The case is Capriole v. Uber Techs., Inc., N.D. Cal., No. 3:20-cv-02211, 5/14/20.

(Updated with comment from Uber in eighth paragraph. An earlier version of this story had additional reporting throughout.)

To contact the reporters on this story: Kathleen Dailey at kdailey@bloomberglaw.com; Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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