Tuesday the 9th Circuit Court of Appeals granted an emergency injunction blocking the City of Seattle from implementing its ordinance authorizing Uber drivers to unionize.
The ruling comes in relation to the US Chamber of Commerce’s lawsuit against the city over the ordinance, claiming several violations of federal law — most notably antitrust law. Earlier this month, a US district court judge ruled in favor of the City of Seattle, dismissing the lawsuit, lifting his own injunction and refusing to stay the ruling pending the Chamber’s appeal.
The city moved quickly to establish a new deadline of August 30th for Uber to deliver a list of its drivers to the Teamsters, the first organization to be certified as a “qualified driver representative.” In response, the Chamber petitioned the appeals court for an emergency injunction, echoing its earlier argument that releasing the list of drivers is an act that can’t be undone later. Recognizing that fact and the looming deadline, the appeals court quickly agreed to a temporary injunction to buy it time for a more permanent stay.
The Chamber has already filed its first brief to the appeals court, laying out its argument. It isn’t allowed to raise new issues, arguments or information in its appeal; it only gets to point out where it believes the district court erred. For the purposes of granting the injunction, it needs to show that it is likely to win the case on the merits, or that the case raises “serious questions” on the merits. At the district court level, the Chamber won an injunction by convincing the judge that there were serious questions, but in his final ruling he found that all of those had been resolved. The Chamber disagrees, obviously; it reiterated two issues.
The first issue it raised turns on the whether the unionization scheme is exempted from the Sherman Antitrust Act. Federal law grants the 50 states exemption as sovereign bodies. Courts have since found that state governments can delegate that exemption to both cities and private organizations for anticompetitive activities that it they find necessary (as Washington has for activities such as regulating taxis), but the state must explicitly declare its reasoning for granting that exemption and must actively supervise the activity. Courts have further ruled that cities don’t need to be supervised by the state, but private organizations do. The question remains, though, whether the state government can delegate that supervision to a city. The city’s ordinance creates a structure for the city to perform that supervision, and of course the city argues that the case law allows it to supervise on behalf of the state; the Chamber disagrees. The 9th Circuit Court ruled unambiguously in 1984 that municipalities can perform the supervision, but in early 1985 the Supreme Court issued a vague ruling, cited by the Chamber, that muddied the waters. So this case presents an opportunity for the appeals court (and possibly the Supreme Court) to clarify the law on this point.
The second issue is whether the National Labor Relations Act explicitly forbids independent contractors from collective bargaining, or whether it’s simply silent on the issue. The Supreme Court has not ruled on this issue, and the NLRA language is unhelpfully vague. Obviously the Chamber is arguing that the NLRA forbids it, and the City argues the reverse. The district court judge sided with the city. This is a huge issue with nationwide implications for “gig economy” companies, so the 9th Circuit will likely want to weigh in and the Supreme Court will eventually be forced to.
Given the high stakes and the ambiguity of the two points of law, it’s likely the Appeals Court will extend its injunction while it hears the case, so don’t expect the city’s ordinance to move forward any time soon. The city will file its brief to the Appeals Court by September 5th.