Uber’s New Legal Strategy: Riders Employ Drivers

A law professor said Uber’s legal tactics are getting “stranger and wilder” and called Wednesday’s argument “completely ludicrous.”

Uber headquarters in San Francisco. (AP Photo/Eric Risberg, File)

SAN FRANCISCO (CN) — An Uber lawyer on Wednesday previewed the company’s new legal strategy for keeping drivers classified as non-employee contractors despite a new California labor law that makes it harder to do so.

Last year, California passed Assembly Bill 5, which requires companies to classify workers as employees unless they perform work that is “outside the usual course of the hiring entity’s business.”

During a video conference hearing of a lawsuit seeking sick pay for Uber drivers in California, Uber lawyer Theane Evangelis said the new state labor law does not apply to her client because Uber does not hire drivers.

“Who would be the hiring entity?” U.S. District Judge Edward Chen asked.

“The individual consumer who asks for a ride,” Evangelis replied. “It is not Uber who is hiring drivers to perform services for Uber.”

Reacting to the revelation of Uber’s new legal tactic, Stanford law professor William Gould IV said in a phone interview that he believes Uber’s positions are getting “stranger and wilder.”

“This one is just completely ludicrous,” Gould said. “If I buy a ticket to get on a train, am I the employer of the conductor or the ticket agent?”

Evangelis also revealed Wednesday that Uber plans to demand discovery on whether two named plaintiffs in the lawsuit also drive for Uber’s competitor Lyft. She said that will help establish if ride-hail platforms are “hiring entities” subject to California’s stricter ABC test for determining a worker’s employment status.

Gould said he does not believe that evidence will help Uber in fighting the litigation.

“There are countless cases where employees work for a number of employers,” Gould said. “That is the modern economy that we live in.”

At the hearing, Judge Chen appeared equally mystified as to how evidence that drivers work for Lyft and Uber will help the company prevail.

“Why does it matter if one of these plaintiffs does work for two or three different companies?” Chen asked.

“It shows whether these entities are hiring platforms or the extent to them being used simultaneously, looking at the Uber app while on a ride they got from the Lyft platform,” Evangelis said. “It’s why we think plaintiffs are not employees.”

Representing lead plaintiff and Uber driver Spencer Verhines, attorney Shannon Liss-Riordan blasted Uber’s request for discovery as a delay tactic.

“Uber is clearly going to do everything it can to stall out a ruling on this in any way it can,” Liss-Riordan said.

Judge Chen on Wednesday also rejected the plaintiffs’ request to postpone ruling on arbitration issues, which could force most Uber drivers to pursue claims of labor violations through individual arbitration.

Citing the judge’s position and the fact that only a small number of Uber drivers have opted out of arbitration, Liss-Riordan said her clients will dismiss class allegations and instead seek summary judgment on behalf of two named plaintiffs in the Verhines v. Uber case. Both named plaintiffs opted out of arbitration.

“Our summary judgment motion will rely on Prong B,” Liss-Riordan said, referring to the second part of the Assembly Bill 5’s ABC test which says a worker must perform work that is outside an employer’s “usual course of business” in order to be classified as an independent contractor.

In March, the plaintiffs filed an emergency motion for a preliminary injunction to make Uber reclassify drivers as employees and provide sick pay.

Following an April 1 hearing, Judge Chen ordered both sides to start negotiating a deal to make it easier for drivers to access Uber’s financial aid program for Covid-19-affected drivers.

On Wednesday, both sides announced that a deal was reached. The plaintiffs withdrew their motion for an emergency injunction, but details of the settlement remain confidential.

Also on Wednesday, Chen heard arguments in a related class action, Capriole v. Uber, which seeks an emergency injunction to make Uber provide sick pay to drivers in Massachusetts. The case was transferred from the District of Massachusetts on April 1.

Chen again ordered both sides to negotiate a deal to expand access to Uber’s sick pay-type program for drivers in Massachusetts. Uber attorney Evangelis said the company is “willing to extend similar terms” of the recently brokered deal for California drivers to Massachusetts.

Chen took the emergency motion for an injunction and motion to compel arbitration in the Capriole case under submission.

A status hearing in both cases is scheduled for May 6.

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