Judge issues preliminary injunction in lawsuit over Uber drivers’ union

Today Judge Robert Lasnik granted the U.S. Chamber of Commerce a preliminary injunction in its lawsuit against the City of Seattle over its ordinance authorizing Uber and Lyft drivers to engage in collective bargaining. But it wasn’t all good news for the Chamber of Commerce and its member companies.

The immediate effect of today’s ruling is that Uber and Lyft don’t need to give the Teamsters a list of their drivers yet. Under the ordinance, now that the union has been certified by the city as a Qualified Driver Representative the companies would otherwise need to give it a list of drivers so that it can offer to represent them.

The standard for a preliminary injunction is well-defined. Plaintiffs need to prove four things:

  • they are likely to succeed on the merits of their case;
  • they are likely to suffer irreparable harm in the absence of relief;
  • the “balance of equities” tips in their favor (i.e. the harm caused to the defendant by an injunction is less than the harm caused the plaintiff without one);
  • an injunction is in the public interest.

But Lasnik also pointed out that there is an alternate test established in the Ninth Circuit:

  • rather than showing likelihood of success, showing that there are “serious questions going to the merits” — a lower bar;
  • the balance of equities tips sharply in favor of the plaintiffs;
  • the other two prongs of the test above are met (irreparable harm and in the public interest).

The Chamber of Commerce also had another hurdle to jump: it needed to prove that as an “association” it had standing to sue on behalf of Uber and Lyft (both members of the Chamber). To do that, it needed to show:

  • its members would have standing to sue in their own right;
  • the interests it seeks to protect are germane to its purpose as an organization;
  • neither the claims it asserted nor the relief it requested require the participation of individual members in the lawsuit (i.e. it can argue it on its own).

The City of Seattle argued that the Chamber of Commerce failed the third test: it needed Uber and Lyft to participate in order to argue its case. Lasnik, for his part, concluded that one of the points the Chamber is arguing — that the price-fixing aspect of the ordinance might alone be enough to invalidate it — doesn’t require Uber and Lyft’s participation, so he gave the Chamber the benefit of the doubt.

That brings us back to the test for issuing a preliminary injunction. In his ruling, Lasnik did a fairly deep analysis of each of the claims the Chamber raises in their complaint, and concluded that it was unclear they would succeed on the merits of any of them.

The Chamber’s first claim was that the city’s ordinance violates federal antitrust law by creating the means for drivers to collude in an illegal price-fixing scheme. However, Lasnik pointed to case law that held cities can create regulations with anticompetitive effects (such as regulating what taxis can charge) under certain circumstances: when it’s the city’s own regulatory scheme, when it’s stated city policy, and when the city itself “actively supervises” it.  Lasnik found that there was a serious, unresolved question as to whether Seattle’s ordinance provides adequate active supervision to fulfill that requirement, but even with that issue the Chamber had not established it would succeed on that claim.

The Chamber’s second claim, in a few parts, is that the city’s ordinance violates the National Labor Relations Act (NLRA), the federal law which establishes rules for collective representation.

The NLRA is a messy law, because it does three things:

  • it establishes and regulates the rules for unionization for most classes of employees, and preempts states and cities from writing their own laws in those areas;
  • it intentionally leaves some classes of employees unregulated so as to leave them open to “the free play of economic forces.” It doesn’t explicitly preempt states and cities from writing their own regulations for those areas, but courts have held that allowing them to do so would interfere with Congress’s intent and so have held that there is an implied preemption.
  • It leaves some classes of employees and employers unregulated and open to regulation by states and cities.

The NLRA has been amended by Congress several times in its history, sometimes in response to Supreme Court rulings, to try to clarify some of its many ambiguities.  One of those amendments says that both “supervisors” and “independent contractors” are not “employees.” The NLRA spells out the rules for employees, and it also says that supervisors may decide to unionize, but employers may not be forced to treat supervisors as employees for the purposes of the law (and thus preempts states and cities from passing laws that do that).  It says very little else about independent contractors, other than that they aren’t employees, and it’s silent on whether they can unionize.

Uber and Lyft have repeatedly asserted that their drivers are “independent contractors” not employees. The Chamber made two arguments: one, that since Congress set out the right to unionize for employees and said that independent contractors are explicitly not employees, they intended  for independent contractors not to have the right to unionize (and thus an implied preemption). They also argued that Uber drivers are more like supervisors than employees (and thus an implied preemption).

The City of Seattle argues that the NLRA doesn’t explicitly prohibit independent contractors from unionizing and doesn’t preempt it, so the city can create its own regulatory scheme for their collective bargaining. Lasnik walked through the legislative history on that point, and sided with the city. He also found that the Chamber’s argument that independent contractors are really supervisors is just silly. This is a very big deal: there is no controlling case law on the question of whether the NLRA allows for or prohibits independent contractors to unionize. Lasnik’s initial analysis says that they are allowed to. His decision will certainly get appealed, possibly all the way up to the Supreme Court, since it has enormous impact on the “gig economy” across the country. But as an initial ruling, it’s bad news for Uber and Lyft. And in the short term, it means that the judge found the Chamber was unlikely to succeed on the merits of their second claim.

Their third claim relates to a specific provision in the ordinance: that Uber and Lyft need to give any and all Qualified Driver Representatives a list of drivers and their driver license numbers, so that the QDR’s can contact them and offer to represent them. Uber and Lyft obviously don’t want to give out that information, and they argue that include drivers license numbers violates the Drivers Privacy Protection Act (DPPA). The DPPA prohibits DMV’s from disclosing driver information except for specific permissible uses, and prevents private parties from disclosing information “from a motor vehicle record.” Here’s where this gets weird: Uber and Lyft don’t get driver’s license information from a DMV; they get it from the drivers themselves, who are required to submit a copy of their license to the company when they sign up as a driver. And that raises another “serious question:” whether the DPPA prohibits companies from giving out driver’s license numbers if they didn’t get them “from a motor vehicle record.” It’s an open question of law, but it again casts doubt on the Chamber’s likelihood of success on the merits.

Having found that across the board the Chamber is not likely to succeed on the merits of its case, Lasnik fell back to the alternate test for granting a preliminary injunction. He had found several “serious questions” outstanding. He also found that the balance of hardships does tip sharply in favor of the Chamber and its members: once the list of drivers is distributed it’s nearly impossible to claw it back, whereas the worst the city can say is that its ordinance will be delayed if an injunction is granted. Lasnik also found that the public is well-served by maintaining the status quo while the case plays out. Based on those findings, he ruled that the Chamber met the alternative criteria for a preliminary injunction and granted it.

An interesting aside: the City doesn’t try to argue that Uber and Lyft drivers are really employees since the companies assign them work and completely control both what they can charge and what they get paid. That question comes up in most discussions of collective bargaining rights for drivers, but because neither side in this case tries to argue the point, it won’t be addressed at all. (don’t worry, there are plenty of other lawsuits against Uber that will try to argue that point)

One other aside: because  the Chamber’s standing to sue requires them to argue the case without the participation of Uber or Lyft, their legal strategy can’t focus on the “facts on the ground.” They will need to attack the legal underpinnings of the ordinance — with a judge who has already telegraphed his skepticism of that approach.

To sum up, the judge told the Chamber of Commerce: “The stakes are high, you’re being asked to do something that can’t be undone later, and there are some big unresolved legal issues. So I’m going to approach this cautiously and give you an injunction for now. But you’re on your own, and I think your case is weak.”

Unless the City of Seattle appeals the injunction and gets it overturned, the case now shifts into a slower gear. They have not yet established a schedule for briefings and oral arguments, but expect that to stretch out over months. In the meantime, the effort to unionize Uber and Lyft drivers is on ice.