Last month I wrote about the status of the U.S. Chamber of Commerce’s legal challenge to the City of Seattle’s ordinance authorizing Uber and Lyft drivers to engage in collective bargaining. Briefly:
- Last year the city tried to get the case thrown out, arguing that it had “state-action immunity.” The 9th Circuit Court of Appeals disagreed, and sent the case back down for further proceedings .
- In December, the City Council amended its ordinance so that it no longer authorizes collective bargaining over compensation, which was very likely to be found to be illegal price-fixing among competitors..
- In response, the Chamber of Commerce said that despite the change, it still believes the ordinance violates the Sherman Antitrust Act.
- The Chamber of Commerce indicated last month that it will move for summary judgment, skipping a trial. This is only allowed if there are no relevant facts in dispute.
- The city responded that it believes there are still relevant facts to be discovered, and will oppose the Chamber’s motion on those grounds.
- The court set a schedule for both sides to file legal briefs, starting with the Chamber of Commerce.
Last Friday, the Chamber started the ball rolling by filing its brief. Here’s what it says.
First, a little more background on the City Council’s recent modifications to the ordinance. While the 9th Circuit ruled that the city didn’t have “state-action immunity,” it didn’t rule that the city’s ordinance actually violated the Sherman Act; instead it sent the case back down to the district court to figure that out. Generally speaking, judges apply the “rule of reason” to determine whether a particular action violates the Sherman Act’s ban on “contracts, conspiracies, and combinations in restraint of trade.” That involves looking at both the positive and negative effects of the action to see whether they tilt more negative or positive in their effect on trade, competition, and most of all on benefit to consumers. However, the U.S. Supreme Court has found that some practices are so obviously and blatantly anti-competitive that they are per se violations of the Sherman Act; courts do not need to apply the rule of reason to make that determination. Price fixing is one of those per se violations: if it’s happening, it violates the Sherman Act. In other words, without state-action immunity, Seattle was on a fast-track to lose the lawsuit if it hadn’t amended its ordinance to remove collective-bargaining for compensation. Having removed it, one would expect courts to rule that issue to be moot.
Not so fast, said the Chamber of Commerce in the legal brief it filed last Friday. It still wants the court to rule that the ordinance’s authorization of collective bargaining for compensation was a violation of the Sherman Act. And there is clear precedent for this, especially in cases where a government entity has lost a case at the district court level, appealed the issue, and then amended its legislation while the appeal was still pending. That is a particularly interesting case, because if the appeals court rules that the issue is now moot, it would typically vacate the lower court’s ruling — meaning that there would no longer be any ruling on the books that the original legislation was illegal, and the government would be free to re-enact the offending provisions at some future point in time after the dust settles. The Uber ordinance case is a slight twist on this: the issue of whether the compensation provision is price-fixing is still pending in front of the district court, but there are no rulings at all on it; so far the only rulings in the case have been on the separate issue of whether Seattle has state-action immunity. But the Chamber of Commerce is insisting, based on some pretty solid case law, that it is still owed a ruling on the price-fixing issue.
In the meantime, the Chamber has raised a second issue in the ordinance that it believes is also a per se violation of the Sherman Act: whether the designation of an “exclusive driver representative” represents a “group boycott” because it prohibits Uber and Lyft from doing business with Seattle drivers who refuse to be represented by the designated union representing the unions. Indeed, group boycotts have been identified by the courts as another per se violation.
The City of Seattle is due to file its “Rule 56(d)” motion on March 6th, in which it will argue that summary judgment is inappropriate at this time because there are relevant facts that still must be gathered through discovery. Inherent in that argument is that the issues the Chamber has raised are not per se violations of the Sherman Act, because if they are then there is almost by definition no more relevant facts; the case turns on the text of the ordinance itself and its legal interpretation.
If the city wins its rule 56(d) motion, then the Chamber’s motion for summary judgment is denied and the case proceeds to trial. If the city loses its motion, then it must turn around and file a response arguing against the motion for summary judgment itself. Either way, it has a tough legal battle ahead.
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