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Uber drivers must arbitrate Mass. misclassification claims – 9th Circuit

4 minute read

Uber and Lyft drivers protest outside Uber’s office in Saugus, Massachusetts, May 8, 2019. REUTERS/Brian Snyder

  • Exception to Federal Arbitration Act does not apply
  • Court denies conflict with earlier 3rd Circuit ruling

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(Reuters) - Uber Technologies Inc drivers in Massachusetts must arbitrate their claims that the company violated state law by misclassifying them as independent contractors and denying them benefits, including paid sick leave during the COVID-19 pandemic, the 9th U.S. Circuit Court of Appeals held Monday.

Affirming a win for the San Francisco-based ride-share company and its lawyers at Gibson, Dunn & Crutcher, the 9th Circuit said an exception to the Federal Arbitration Act (FAA) for workers “engaged in foreign or interstate commerce” does not apply because Uber’s services are “primarily local and intrastate in nature.”

The case was one of first impression for the 9th Circuit, and only the second decision by a federal appeals court on whether the exception applies to ride-share drivers. In September 2019, the 3rd Circuit remanded a potential class action by Uber drivers in New Jersey for additional factfinding on whether they were, in fact, engaged in interstate commerce.

However, the 9th Circuit said there was no conflict between its decision and the 3rd Circuit’s between its decision Monday and the 3rd Circuit’s 2019 decision, Singh v. Uber Technologies Inc.

In Singh, the lower court had found passenger services were categorically excluded from invoking the FAA exception, and never considered whether the drivers were engaged in interstate commerce.

“Singh stands only for the proposition that any interstate commerce exemption inquiry must focus on the district court’s factual findings regarding the extent of interstate work,” Circuit Judge Kim McLane Wardlaw wrote Monday for the 9th Circuit. “Here, the district court’s unchallenged factual findings compel the conclusion that Uber’s service is primarily local and intrastate in nature.”

Specifically, U.S. District Judge Edward Chen in San Francisco had ordered the Massachusetts case to arbitration last year after finding that only 2.5 percent of U.S. trips using the Uber Rides marketplace between 2015 and 2019 started and ended in different states. Chen also found that only 10.1 percent began or ended at an airport – “not all of which involved interstate travel,” Wardlaw wrote.

She was joined by Circuit Judge Jacqueline Nguyen and Senior U.S. International Trade Court Judge Richard Eaton, sitting by designation.

Theane Evangelis of Gibson Dunn, who argued for Uber in the 9th Circuit, issued a one-sentence statement that the case was correctly decided.

Shannon Liss-Riordan of Lichten & Liss-Riordan, who argued for case for Massachusetts-based drivers John Capriole, Martin El Koussa and Vladimir Leonidas, said she was “very disappointed.”

“The court further cemented the inability for Uber drivers to obtain relief from Uber’s systemic violation of wage and hour laws,” Liss-Jordan said. “I expect we will seek further review from the Ninth Circuit, but the real relief will come when Congress brings some sanity back to this area of law and ends forced arbitration.”

The case is one of dozens in which ride-share drivers around the country say they were misclassified. Chen approved Uber’s $20 million settlement of earlier claims by thousands of drivers in California and Massachusetts in August 2019.

The case is John Capriole et al, individually and on behalf of others similarly situated v. Uber Technologies Inc et al, 9th U.S. Circuit Court of Appeals, No. 20-16030.

For Capriole et al: Shannon Liss-Riordan of Lichten & Liss-Riordan

For Uber Technologies et al: Theane Evangelis, Samuel Eckman, and Joshua Lipshutz of Gibson Dunn & Crutcher

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