SAN FRANCISCO (CN) - Despite claims that Uber's business model deprives California of tax dollars and makes it spend more on public assistance for low-paid workers, a federal judge signaled Thursday he will likely deny a request for an injunction that would force Uber to treat its drivers as employees.
"Harm to the public interest is a factor, but you have to go through several doors," U.S. District Judge Edward Chen said in court Thursday.
Chen is presiding over one of the first labor class actions filed against Uber since California Gov. Gavin Newsom signed Assembly Bill 5 into law in September. The new state law, which takes effect Jan. 1, requires employers like Uber classify drivers as employees rather than independent contractors, making them eligible for benefits such as minimum wage, overtime, sick pay, expense reimbursement and workers’ compensation.
Uber has already stated it will continue classifying drivers as contractors next year because it believes its drivers are not employees under the three-part "ABC test" established in the California Supreme Court's 2018 Dynamex decision and written into law by Assembly Bill 5. Uber is one of three companies that vowed to pour $30 million each into a 2020 ballot measure aimed at overturning the new state labor law.
On Thursday, Chen asked a lawyer for lead plaintiff and Uber driver Thomas Colopy how this case has a "direct impact on the general public" in a way that would justify granting a preliminary injunction for a proposed but not yet certified class of Uber drivers.
Colopy's lawyer Shannon Liss-Riordan, of Lichten & Liss-Riordan in Boston, has litigated dozens of labor suits against Uber and Lyft over the last decade. She argued that Uber is not just another company. Rather, it has "defined an entire industry, many have said an entire economy" based on depriving workers of their rights under the California labor code, she said.
Liss-Rioridan noted that the California Legislature specifically recognized public harm caused by worker misclassification when it passed AB5 earlier this year. The text of the law states that worker misclassification has been "a significant factor in the erosion of the middle class and the rise in income inequality."
Despite Liss-Riordan's impassioned advocacy, Chen remained skeptical that a "private dispute" over worker misclassification and wages could justify a preliminary injunction to remedy harm to the general public.
"You could say any industry practice affects the general public," Chen said. "Everything has ramifications, but public injunction cases are generally ones that have a direct impact on the general public."
Liss-Riordan replied that drivers like her client suffer irreparable harm. They cannot find similar jobs with full employment benefits because Uber has "transformed an entire industry" into one in which companies misclassify workers, she said.
Uber attorney Theane Evangelis, of Gibson, Dunn & Crutcher in Los Angeles, countered that Liss-Riordan offered no evidence to support that claim. She said a preliminary injunction is not justified because an award of monetary damages after the case is resolved would adequately remedy any alleged violation of the law.
Evangelis insisted that no evidence supports the "extraordinary remedy" of a preliminary injunction that would "fundamentally alter Uber's entire business model."
Chen said he has to follow the Ninth Circuit's prior rulings, which warn judges not to issue class-wide injunctions for an uncertified class of plaintiffs except in "very narrow circumstances."
Turning to Uber's motion to dismiss, Chen said most of the claims asserted in Colopy's 15-page class action complaint will likely survive. However, the judge said the plaintiff may have to provide more details on how much time he worked and how much he was paid. Those details are needed to support claims that Uber denied drivers minimum wage and overtime pay, Chen said.
Liss-Riordan argued the actual amount of time her client spent as a driver on the Uber app could be easily ascertained from Uber's records, adding she does not believe that level of detail is required at this early stage of the litigation.
The judge disagreed.
"It seems to me there has to be some degree of specificity here," Chen said.
After about 40 minutes of debate, Chen took the arguments under submission.