By Charles O. Thompson and Stan Hill
The Uber mobile app, which matches consumers requesting rides with nearby drivers, is available in over 200 cities worldwide. Uber’s revolutionary business model has been a remarkable commercial success and has inspired sharing economy startups in a variety of fields—a phenomenon known as "Uberification." This fundamental evolution in the delivery of goods and services has drawn the attention of the plaintiff’s bar like wolves into the flock.
Lawsuits challenging the staffing models underlying the sharing economy pose a substantial threat to its realized efficiencies. Recent lawsuits by Uber drivers argue that they are employees, rather than independent contractors, under California law, and thus entitled to overtime wages, unemployment, cost reimbursements, and other traditional employment benefits and protections. Because these cases have broad implications for the emerging sharing economy, not to mention fair fares to and from your local airport, we will be tracking these cases in a recurring “Uber Watch” series.
Riding the wave of litigation arguing for an expanded definition of employment in the franchise context, attorneys for Uber drivers seek to expand the definition of employment under California law to include Uber drivers classified as independent contractors. If the drivers’ arguments are accepted, Uber would be subject to the wide range of legal obligations owed by an employer to its employees. The costs associated with an expanded definition of employment could potentially upend the sharing economy business model of many ventures.
A handful of class actions have been filed against Uber in the Northern District of California and have been assigned to the same federal judge, the Hon. Edward Chen. Despite asserting different employment-related claims under different California laws, many of these cases place at issue whether Uber’s drivers are employees or independent contractors. Identifying a potential common issue, on May 14, 2015, Judge Chen directed counsel in several Uber employment cases to discuss how to prepare their cases for summary adjudication, or even a trial, on that question.
While the Court’s suggestion of consolidated partial adjudication is not unprecedented, and may in theory serve judicial economy, any such adjudication must comply with the strict class certification requirements of Federal Rule of Civil Procedure 23. The rigor of these requirements is amplified by the factual differences across cases, which compound factual variances within each case’s claims. The Court’s desire for judicial economy must also cede to Uber’s Constitutional due process rights, which arguably extend beyond the procedural guarantees of Rule 23 when multiple cases are consolidated for class adjudication of a single issue. Management remains perplexed as to why the court, in its neutrality and call for judicial efficiency, appears to lean towards the plaintiffs favor in these actions.
Stay tuned for further developments in Uber litigation and other cases challenging staffing models outside the traditional employment relationship.