Uber Sues NYC to Negate Driver ‘Wrongful Deactivation’ Law (1)

Uber Technologies Inc. sued New York City alleging its recently enacted law that seeks to protect drivers from “wrongful deactivations” violates the company’s constitutional rights.

Local Law 52 of New York City of 2026, which takes effect July 28, would force Uber to keep drivers on its platform even if the ride-share giant has determined that they’ve violated its standards, agreements, and policies, according to the lawsuit filed Tuesday in the US District Court for the Southern District of New York. Uber seeks preliminary and permanent injunctive relief blocking the law.

If the measure takes effect, “it will permanently impair Uber’s contracts, compel the communication and disclosure of sensitive and protected information that Uber would not otherwise provide, force at least temporary association with drivers whom Uber would otherwise deactivate, subject Uber to an unfair and lopsided adjudicative process, and potentially lead to reputational harm and a loss of business and goodwill,” the lawsuit says.

Once the law takes effect, all of the more than 12,000 New York City drivers deactivated since July 2019 can petition Uber for reinstatement, according to the complaint. Uber says it will be required to “expend enormous resources” to re-investigate and respond to thousands of deactivations, “each of which took place when Uber had no inkling that it had to retain the relevant documents and information, and then in seven years it might be required to justify the deactivation with evidence.”

‘Kangaroo Court’

The New York City Council passed the law in January, overriding a veto by former Mayor Eric Adams (D), with the goal of protecting drivers from being wrongfully deactivated from high-volume, for-hire vehicle services. The ordinance requires companies notify drivers that they’ll be deactivated 14 days before the deactivation takes effect.

It also allows drivers to request an investigation by the Department of Consumer and Worker Protection, during which the for-hire service must prove it has just cause and a bona fide economic reason for the deactivation.

That requirement seeks to “construct kangaroo court proceedings before a fact-finder either in a private action court or in front of the Department of Consumer and Worker Protection,” Uber says. Under that process, all deactivations are presumed unjust and Uber’s ability to defend itself is restricted.

The law also violates Uber’s First Amendment rights, the company alleges, by requiring that drivers be provided with information and data relevant to their deactivation, including all customer comments, ratings, and complaints.

The platform currently doesn’t provide that information to drivers because doing so “would be detrimental to rider safety and to both rider and driver privacy, including as articulated in Uber’s contractual agreements, and would also give fraudsters an upper hand in evading detection,” the complaint says.

Upending Contracts

The company claims the council “did not scrutinize” whether the procedural concerns with driver deactivations “actually constitute a real, or widespread, problem.”

Uber and its drivers enter into a contract that specifies the types of conduct that may lead to deactivation and establishes each parties’ rights. Drivers typically receive warnings and notices beforehand, and there are options to appeal afterward, according to the company’s complaint.

Having the contractual right to deactivate a driver “is critical to Uber’s business,” the filing says. Letting a driver who engaged in misconduct continue to interact with riders “poses an avoidable risk that Uber’s contracts are designed to minimize.”

The city’s Law Department told Bloomberg Law via email, “the case is under review.”

Dunn Isaacson Rhee LLP represents Uber.

The case is Uber Techs., Inc. v. City of New York, S.D.N.Y., No. 1:26-cv-04893, complaint filed 6/9/26.