Class of 5,000 Uber drivers OK'd in classification fight

A federal judge certified Tuesday a class of nearly 5,000 Uber drivers, setting the stage for what could be the first trial on whether the ride-hailing giant misclassified them as independent contractors instead of full-fledged employees.

The class consists of California drivers who worked for Uber between Feb. 28, 2019 until the passage of Proposition 22 in Dec. 16, 2020 and did not sign arbitration agreements. Plaintiffs' attorney Shannon Liss-Riordan emphasized that she could dramatically expand the scope of the class if the 9th U.S. Circuit Court of Appeals rules that ride-hailing app drivers fall under an exemption to the Federal Arbitration Act for transportation workers.

"If we were to win on that argument, we could get a class again for all California Uber drivers," the Lichten & Liss-Riordan PC partner said.

Uber did not immediately respond to requests for comment on the decision by U.S. District Judge Edward Chen in San Francisco.

Drivers sued Uber last year, saying its business model is illegal under Assembly Bill 5, which made it more difficult for entities to classify their workers as independent contractors. It codified the legal test established by the state Supreme Court in Dynamex Operations West Inc. v. Superior Court of Los Angeles County, which set a three-pronged test to examine worker classification, known as the ABC test.

The test presumes workers are employees unless a business can show that a worker is free from its control, performs work that is outside the usual course of its services and is engaged in independently established work of the same nature as the work performed for the business. All three must be satisfied.

The lawsuit originally sought to represent all drivers starting in February 2019 who opted out of arbitration. While the passage of Proposition 22, which exempts app-based transportation and delivery companies from the ABC test, limited the class period, Chen said drivers who are part of the class can still receive damages for misclassification. James v. Uber Technologies Inc., 19-cv-06462 (N.D. Cal., filed Oct. 8, 2019).

"Because Prop 22 does not apply retroactively, at most it forecloses damages in this case for conduct that occurred after December 16, 2020," he wrote.

Uber opposed class certification on the basis that individual issues predominate as to each of the prongs of the ABC test. It argued that there are not enough common issues among the drivers to proceed as a class action.

Chen rejected the argument as to the prong examining whether workers are free from Uber's supervision.

"The varying experiences of drivers on the app matters not for class certification purposes because whether Uber drivers are given sufficient flexibility such that they are not under Uber's control for purposes of prong A is susceptible to common and classwide proof, namely, the terms of Uber's current agreement," he wrote.

The judge also sharply rebuked Uber's claim that drivers perform work that's outside of the company's usual operations, finding that he's "repeatedly held that Uber and Uber's drivers are both in the business of transportation."

But Uber correctly argued, Chen ruled, that individualized evidence is required to determine the last prong of the ABC test, examining whether workers independently engage in similar transportation services.

"A finder of fact could plausibly conclude that some of these putative class members are engaged in an independently established business under prong C of the ABC test, while others are not," he wrote. "This requires an intensive fact-based inquiry on a case-by-case basis."

Drivers can still be classified as employees regardless of this prong if Uber does not satisfy the first two prongs of the ABC test.

In a previous class action on behalf of more than 15,000 drivers, saying Uber misclassified workers, Liss-Riordan and the company reached a $20 million settlement shortly before trial. O'Connor v. Uber Technologies, Inc., 13-cv-03826 (N.D. Cal., filed Aug. 13, 2013).