One of the more interesting issues on the horizon that has implications for workers’ comp is the question of whether “gig economy” workers will have rights as employees. In various posts I’ve been commenting on the Lyft and Uber class actions since those seem to be the poster children for the disruptive companies who seek to change the legal landscape.
So it was with interest this morning when I read the workcompcentral.com headline “Uber threatens to walk away from proposed $84 million settlement”. Their source appears to be a Bloomberg.com article which claims that Uber may now have the upper hand in negotiations over whether a tentative class action settlement in O’Connor V. Uber Technologies will be approved by U.S. District Court Judge Edward Chen.
Chen had ordered the parties to the proposed class action settlement to provide additional information by mid-July.The responses of the parties have not yet been posted on the U.S. District Court website. In any event, at the moment it is not clear whether Chen will approve the settlement.
But apparently Uber has adopted a take it or leave it position.
Uber may be emboldened by how oral arguments went at the June 16 hearing held at the U.S. Courthouse of the U.S. Court of Appeals for the 9th Circuit in a companion case, Mohamed v. Uber Technologies.
Uber claims that orders made by Judge Chen violate its First Amendment rights and violate the Federal Arbitration Act (see link to their brief below). At stake are Chen’s rulings on the applicability of Uber’s arbitration agreements (there were several versions) as applied to the drivers and whether Chen had the authority to force Uber to issue certain notices with arbitration opt-out language.
The 9th Circuit argument, which lasted about an hour, was preserved on video. I’ve included a link at the bottom of this post for those who want to follow the nuances of the law surrounding arbitration agreements and class actions. Federal law has been trending in favor of allowing arbitration clauses in contracts, and the U.S. Supreme Court has approved such provisions in cases such as Circuit City Stores V. Adams (2001) (in an employment context) and AT&T Mobility v. Conception (2011) (in a consumer context). In Circuit City the plaintiff was attempting to pursue FEHA and civil tort claims.
On the other hand, in Sakkab v. Luxxotica (2015) the 9th Circuit has held that the Federal Arbitration Act did not preempt a California court decision (Iskanian v. CLS) which allows wage and hour claims to be pursued under the PAGA, the California Private Attorneys General Act.
Timing is everything in life.
An Über win at the 9th Circuit on the arbitration agreement issues could cripple or eviscerate the class action claims.
An Über loss at the 9th Circuit could strengthen the negotiating position of the class claimants. Or failing to reach a deal, one or both sides could decide to pull out, guaranteeing a trial on the underlying issues as to whether Uber workers are employees or independent contractors.
Under the circumstances, the timing of actions by Judge Chen or the 9th Circuit may be critical.
None of this may be dispositive as to how the California workers’ comp system will handle an Uber driver comp claim, but it bears close watching.
Here is a link to the video of the June 16 oral argument at the 9th Circuit in front of the panel of Judges Tallman, Clifton & Ikuta:
Here is the decision in Sakkab V. Luxxotica: