Laid-Off Uber Drivers Fight Arbitration Clauses

SAN FRANCISCO (CN) – Drivers who lost their jobs last year when Uber pulled out of Austin, Texas, asked a federal judge Thursday to nullify arbitration clauses that would block them from suing the ride-hailing giant as a class.

Lead plaintiff Todd Johnston sued Uber in June 2016, claiming it violated the Workers Adjustment and Retraining Notification (WARN) Act when it abruptly stopped operating in Austin, Texas.

The San Francisco-based startup pulled out of the Texas capital in May last year after voters rejected an Uber and Lyft-backed proposal to repeal a city law requiring stringent, fingerprint background checks for drivers.

During a hearing in the Northern District of California Thursday, class attorney John Davis told U.S. District Judge Edward Chen that the WARN Act contains a “contrary congressional command” that guarantees workers the right to sue their employer as a class.

“The statute says you may file a class action and makes that non-waivable in contracts,” Davis said.

The WARN Act, passed by a veto-proof supermajority in 1988 without the approval of President Ronald Reagan, requires companies with more than 100 employees to give at least 60 days notice before a  mass layoff.

Representing Uber, attorney Keith Jacoby contended that while the WARN Act clearly gives workers the right to sue collectively, it does not override another statute, the Federal Arbitration Act, which guarantees the right to resolve disputes through private arbitration.

“An arbitration agreement is the choice this person made – to sue individually,” Jacoby said of Johnston. “Once we start talking about arbitration agreements, this hearing is over.”

In September last year, the Ninth Circuit overturned Chen’s ruling in a separate case and held that Uber’s 2013 and 2014 arbitration agreements for drivers were valid.

That ruling had ripple effects for multiple labor class actions against Uber. The central dispute in those suits was whether Uber misclassifies its drivers as independent contractors—which is the same issue that must be resolved before Austin drivers can pursue their claims of WARN Act violations.

Regardless of the Ninth Circuit’s arbitration ruling, Davis says WARN Act violations are a horse of a different color because such violations must be litigated in district court and that the right to pursue those claims as a class cannot be waived.

The plain language of the statute, which includes a U.S. District Court “exclusive venue” provision, shows that Congress intended for employees to be fully empowered to litigate WARN Act violations collectively in federal court, Davis told the judge.

In a brief opposing Uber’s motion to compel arbitration and dismiss the suit, the drivers quoted one of the WARN Act’s early sponsors, the late U.S. Senator Ted Kennedy, who said the bill’s provisions were “too important as a matter of public policy to be left to the vagaries of private contract.” Kennedy also said the law was drafted in “recognition of the fact that private plaintiffs will be functioning as private attorneys-general” to enforce the statute.

“Why would Congress write the WARN Act at all and have no enforcement authority?” Davis asked at Thursday’s hearing.

Appearing to disagree with Davis’ interpretation, Chen replied that a driver could still seek damages for WARN Act violations through individual arbitration.

“One could argue there is still an enforcement mechanism,” Chen said.

“It would be an incredibly weak statute,” Davis replied.

Also weighing in on the dispute, Jacoby called the idea that WARN Act violations cannot be resolved through individual arbitration a false premise.

Nothing in “the plain language of the statute” says that “Mr. Johnston is not permitted to contractually agree to pursue his rights in arbitration,” Jacoby told the judge.

After about an hour of debate, Chen said he would take the arguments under advisement.

Davis is with Slack & Davis in Austin. Jacoby is with Littler Mendelson in Los Angeles.

A similar lawsuit against Lyft was dismissed in November last year after the lead plaintiff, David Thorton, died, and no representative of his estate stepped forward to continue the litigation.

Both Uber and Lyft returned to Austin late last month after the Texas governor approved a new state law that places less restrictive rules on digital-based ride-hailing firms and bars local governments from regulating such services.

The court hearing over mass layoffs in Austin comes during a tumultuous week for Uber, in which its CEO Travis Kalanick took a leave of absence, a board of directors member resigned after making a sexist remark, and a rape victim filed invasion of privacy claims against the company – even as it remains embroiled in another lawsuit accusing it of stealing self-driving car technology from a Google-owned rival.

 

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