(Recasts to add Uber ruling)
By Dan Levine and Edwin Chan
SAN FRANCISCO, March 11 Ride hailing apps Uber
and Lyft failed to persuade separate U.S. judges on Wednesday to
rule that their drivers are independent contractors instead of
employees, in cases that have wide implications for Silicon
Valley "sharing economy" firms.
U.S. District Judges Edward Chen and Vince Chhabria in San
Francisco federal court said in two rulings that juries would
have to determine the status of each companies' drivers.
Uber and Lyft face separate lawsuits seeking class action
status in San Francisco, brought on behalf of drivers who
contend they are employees and entitled to reimbursement for
expenses, including gas and vehicle maintenance. The drivers
currently pay those costs themselves.
An ultimate finding against the two biggest car-ride
services could significantly raise their costs beyond the
lawsuits' scope and force them to pay Social Security, workers'
compensation, and unemployment insurance.
That could in turn affect the valuations of not just Lyft
and Uber but also other startups that rely on large networks of
privately contracted individuals to provide rides, clean houses
and the like.
Uber, Lyft and lawyers for the plaintiffs did not
immediately respond to requests for comments on the ruling.
Uber has raised more than $4 billion from prominent venture
capital firms such as Benchmark and Google Ventures, valuing the
company at $40 billion and making it the most valuable U.S.
startup. Lyft has raised $331 million from Andreessen Horowitz,
Founders Fund and other investors.
In Wednesday's ruling, Chhabria acknowledged the difficulty
of parsing the status of Lyft's drivers, who share common
characteristics with both full-time employees and contractors.
"The jury in this case will be handed a square peg and asked
to choose between two round holes," the judge wrote.
"California's outmoded test for classifying workers will
apply in cases like this. And because the test provides nothing
remotely close to a clear answer, it will often be for juries to
(Reporting by Dan Levine and Edwin Chan; Editing by Phil
Berlowitz and Steve Orlofsky)