Uber Driver-Rating Bias Appeal to Test EEOC’s ‘Real World’ View

A former Uber Technologies Inc. driver backed by the US government will seek to convince the Ninth Circuit on Thursday to revive his proposed class action alleging that the ride-sharing giant’s reliance on customer ratings to determine which drivers to deactivate has a disparate impact on racial minorities.

A ruling by the US Court of Appeals for the Ninth Circuit risks unwanted implications for workers or employers, depending on what the court decides. For workers, it could mean diminished chances of being able to pursue claims of widespread bias flowing from facially neutral employment practices or policies; for employers, it could mean more easily and frequently facing the expensive and time-consuming class or similar lawsuits in which disparate impact bias is typically asserted.

The appeal may also provide insight into the Equal Employment Opportunity Commission’s argument that a specific alternative “path” exists for pleading disparate impact discrimination.

A federal judge in San Francisco repeatedly dismissed Thomas Liu’s case. The judge largely faulted statistical evidence presented by Liu—who is Asian, from Hawaii, and speaks with a slight accent. The statistics were developed from a survey conducted by Liu’s attorney of approximately 20,000 Uber drivers who are clients of her firm, 4,093 of whom responded.

The EEOC, which backs Liu on appeal, says workers don’t need “sophisticated forms of evidence, including statistical analysis” to plead a disparate impact. It’s too soon for that, because plaintiffs often don’t have access to employer records or other necessary information so early in the case. At this stage, workers can just identify the challenged policy and point to “real-world conditions” that suggest it will result in a disparity, which Liu did by citing social-science research analyzing Uber’s customer-rating system and the company’s past statements that riders discriminate when tipping, the agency said.

The lower court misstepped by holding Liu to a heightened standard beyond the pleading test set by the US Supreme Court roughly 15 years ago, according to the EEOC.

Plausible Versus Possible

Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal created a subjective, amorphous standard that can be difficult for courts and litigants to apply, employee-side attorney Moira Heiges-Goepfert told Bloomberg Law said. She’s with Outten & Golden LLP and isn’t involved in the case.

Under that test, a lawsuit can survive a motion to dismiss if it states a claim that is plausible. Being merely “possible” isn’t enough.

“Plausibility” is often in the eye of the beholder, Heiges-Goepfert said.

There are limited federal circuit rulings addressing motions to dismiss in disparate-impact cases post-Twombly/Iqbal, the EEOC’s brief said. Its “real-world conditions” argument is partly based on cases decided under the Fair Housing Act, which similarly allows disparate impact claims.

The EEOC states the standard correctly, Heiges-Goepfert said. Under well-established precedent, statistics aren’t necessarily required and this case is at the pleading stage, she said.

But Seyfarth Shaw LLP’s Matthew J. Gagnon said workers claiming disparate impact bias should be required to come forward with plausible allegations that each substantive element of the claim is present. That’s different from the EEOC’s argument that plaintiffs aren’t required to plead the prima facie prongs of the McDonnell Douglas test, which is frequently used at summary judgment to assess whether a worker has triable evidence of job discrimination, he said.

A disparate impact element is that a racial or other prohibited disparity happened, not just that it might have happened, the management-side lawyer, who also isn’t affiliated with the case, said. That’s all the lower court held Liu to here, he said.

Equities Debated

Some laws or legal theories carry a greater degree of risk for employers than others, Gagnon said. Disparate impact litigation is one of them, he said.

They’re almost always big cases, based on pattern-or-practice or class-action allegations, Gagnon said. As a result, disparate impact lawsuits generally put employers through a lot of expense. If the Ninth Circuit sides with Liu, companies will need to face that expense simply based on allegations of “what could be happening,” he said.

The potential burden, expense, and risk associated with disparate impact claims justify a higher standard to get past the pleading stage, Gagnon said. “I think it’s written into the law that way,” he said.

Opening the door to disparate impact claims to this extent could create snowballing risks, Gagnon said. More claims will be brought and more will advance without them necessarily being meritorious, he said.

That argument ignores the everyday costs and burdens that unlawful, discriminatory policies impose on workers, which also negatively impact their families, the economy, and society at large, Heiges-Goepfert said.

There are also policy issues at play, Heiges-Goepfert said. This case concerns pervasive racism, but the same is true in disparate impact cases alleging other types of bias or mistreatment, especially claims that involve historically marginalized groups, she said.

If an employer’s policy relies on metrics that incorporate racial bias, the employer should need to look to accomplish the policy’s goals in a different way, or show that continuing with its approach is a business necessity, Heiges-Goepfert said.

Novel Theory?

“I don’t think the real-world conditions argument is something I’ve seen before,” Gagnon said. But disparate impact claims are a bit fact dependent, so they are hard to categorize broadly. That makes the EEOC’s stance maybe not that new, as there is no one way to analyze disparate impact claims, he said.

Uber is in some sense saying the same thing, it’s just arguing that the allegations here don’t plausibly state a racial disparity, Gagnon said.

But where the EEOC is maybe going too far is “in trying to abstract and apply an across-the-board general rule that allows plaintiffs to succeed when they don’t have statistics supporting a disparity,” Gagnon said. That’s part of what the EEOC does with its argument; it isn’t limited to just enforcing the law, he said.

The EEOC spends a considerable amount of time trying to shape the law, Gagnon said. The agency doesn’t really mention the facts of Liu’s case at all in its brief, he said.

A lot of the time when the EEOC is an amicus, it’s already backed its position in guidance documents or the like, Gagnon said. That’s more understandable, because then it’s defending a position it’s previously taken as an agency. Here, you don’t have that, he said.

Trying to Avoid Heightened Test

The EEOC is maybe only “trying to avoid a pattern or trend” so the law doesn’t evolve into “a heightened pleading standard that makes it harder for workers to get into court with disparate impact claims,” Heiges-Goepfert said. The standard shouldn’t be especially onerous, she said.

There are cases where the inference of disparate impact bias from an employment policy or practice is so logical that the plaintiff doesn’t need anything more, Heiges-Goepfert said. Then there are cases closer to this one, where more is required and the question is how much more, she said.

Many judges recognize that plaintiffs need a way to get these sort of claims into court, Heiges-Goepfert said. That’s so workers disparately harmed by an employment policy can vindicate their rights, and so discrimination can be eradicated more broadly, she said.

She thinks what the EEOC means with its real-world conditions argument is that disparate impact bias lawsuits can be backed by social-science research, by statistical analyses that are analogous or adjacent to the more refined statistics generally used to prove a claim, or by any other type of logical or practical information, Heiges-Goepfert said.

Just as Liu did here, she said.

The appeal will be heard by Ninth Circuit judges Daniel P. Collins, Danielle J. Forrest, and Jennifer Sung.

The EEOC has been granted time to participate in the oral argument. The agency declined to comment on the case.

Liu’s attorney and counsel for Uber also didn’t provide comment.

Lichten & Liss-Riordan PC represents Liu and the proposed class. Littler Mendelson PC represents Uber. EEOC attorneys in Washington represent the commission.

The case is Liu v. Uber Techs., Inc., 9th Cir., No. 22-16507, oral argument 12/7/23.