Uber Class-Action Waivers Invalid, Labor Watchdog Tells 9th Circuit

SAN FRANCISCO (CN) – Appearing before a Ninth Circuit panel Wednesday, a lawyer for the federal government’s labor watchdog said Uber can’t make drivers give up their rights to participate in class actions against their employer.

“The opt-out provision in Uber’s arbitration agreement does not rehabilitate what would otherwise under this court’s decision in Morris be an unlawful waiver of an employee’s Section 7 rights,” said National Labor Relations Board attorney Jeffrey Burritt, referring to the Ninth Circuit’s 2016 ruling on the unenforceability of class action waivers in Ernst & Young v. Morris.

Burritt was speaking at a hearing on Uber’s consolidated appeals in four related labor class actions. Uber wants the appeals court to dismantle a class of drivers and rule the workers must resolve their labor disputes through individual arbitration.

Finding that the National Labor Relations Act has historically deemed arbitration a valid means of resolving disputes, Ninth Circuit Judge Richard Tallman said he found it “very curious” that the board now takes a position that is “contrary to decades of practice.”

Burritt replied that arbitration is not the issue, but rather agreements that require employees waive their rights to resolve disputes collectively.

“The board’s concern is the ability of employees to retain their rights to either engage in or refrain from concerted activity at the time a dispute arises,” Burritt said.

In September 2016, Tallman and two other Ninth Circuit judges upheld Uber’s 2013 and 2014 arbitration agreements as valid, reversing a federal judge’s ruling to the contrary. But the ruling only applied to one of four class actions against the ride hail giant – Mohamed v. Uber.

“This court already held that Uber’s arbitration agreements are enforceable,” Uber attorney Theodore Boutrous Jr. told the panel on Wednesday.

The latest set of appeals seeks to decertify a class of drivers in O’Connor v. Uber and reverse denials of motions to compel arbitration in two other cases – Yucesoy v. Uber and Del Rio v. Uber.

Arguing before the same Ninth Circuit panel that validated the arbitration clauses, Boutrous reminded the panel that it already rejected the notion that Uber’s arbitration agreements were “unconscionable.”

“For that reason alone, we respectfully submit the class in the O’Connor case must be decertified,” Boutrous said.

Arguing for the plaintiffs, attorney Shannon Liss-Riordan parroted the position of the National Labor Relations Board, stressing that Uber can’t make workers give up their rights to pursue collective legal action against an employer.

“The National Labor Relations Act precludes employers from preventing employees from engaging in concerted activity, and an opt-out provision cannot save it from illegality,” Liss-Riordan said.

Circuit Judge Richard Clifton asked if it would make sense to hold off issuing a ruling on this appeal until the U.S. Supreme Court decides three similar cases on the validity of class action waivers.  The high court is set to hear oral arguments in those cases – National Labor Relations Board v. Murphy Oil USA, Epic Systems Corp. v. Lewis, and Ernst & Young v. Morris – on Oct. 2

One of those cases – Ernst & Young v. Morris – was decided by the Ninth Circuit in August 2016. The appeals court held that the accounting firm could not force its employees to arbitrate their disputes individually, rather than collectively.

Burritt said it would be prudent for the Ninth Circuit panel to wait for the Supreme Court’s ruling in those cases before it decides on Uber’s appeal. A decision is expected early next year.

Moving beyond the issue of class waivers, Boutrous also urged the panel to decertify the class of Uber drivers on separate grounds. He argued that U.S. District Judge Edward Chen erred in holding that the drivers’ individualized beliefs and intent “were not a significant factor” in whether they were misclassified as independent contractors.

Boutrous argued that directly contradicts the California Supreme Court’s reasoning in the 1989 ruling S.G. Borello & Sons Inc. v. Dept. of Industrial Relations. Because those individual factors require separate inquires for each driver, that makes class certification unfeasible, Boutrous argued.

Circuit Judge Sandra Ikuta joined Tallman and Clifton on the panel, which took the arguments under advisement after 70 minutes of debate.


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